1) Operating and transaction exposures can be partially managed by adopting operating or financing policies that offset anticipated foreign exchange exposures. There are five most commonly employed proactive policies. One of it is risk-sharing agreement. Explain in detail on risk-sharing agreement and how it can assist in offsetting the foreign exchange exposure.

2) Prosperous Co. has purchased New Zealand dollar put options for speculative purposes. Each option was purchased for a premium of USD0.02 per unit, with an exercise price of USD0.86 per unit. Prosperous Co. will purchase the New Zealand dollar before it exercises the options (only if it is feasible to exercise the options) It plans to wait until the expiration date before deciding whether to exercise the options. In the following table, fill in the net profit (or loss) per unit to Prosperous Co. based on the listed possible post rates of the New Zealand dollar on the expiration date.

Possible Spot Rate of New Zealand Dollar on Expiration Date	Net Profit (Loss) Per unit for Prosperous Co. (USD)
USD 0.79
USD 0.84
USD 0.87
USD 0.89

3) Uzair is speculating in the movement of USD and EUR. Uzair has USD10 million to begin with, and Uzair must state all profits at the end of any speculation in USD. The spot rate on the euro is USD0.885/EUR, while the 30-days forward rate is USD0.900/EUR. (Note: State all answer in USD)

a. If Uzair believes the euro will continue to slide in value against the U.S. dollar, and he expects the spot rate to be USD0.800/EUR at the end of 30 days, what should he do?

b. If Uzair believes the euro will appreciate in value against the U.S. dollar, and he expects the spot rate to be USD0.950/EUR at the end of 30 days, what should he do?