1.There is a risk that the value of our foreign currency-denominated assets and liabilities will change when we prepare our accounts' To which risk does the above statement refer?

2 The following information has been calculated for A Co: Trade receivables collection period: 52 days Raw material inventory turnover period: 42 days Work in progress inventory turnover period: 30 days Trade payables payment period: 66 days Finished goods inventory turnover period: 45 days What is the length of the working capital cycle?

3 Which of the following is/are usually seen as benefits of financial intermediation? (1) Interest rate fixing (2) Risk pooling (3) Maturity transformation

4 Which of the following statements concerning working capital management are correct? (1) The twin objectives of working capital management are profitability and liquidity (2) A conservative approach to working capital investment will increase profitability (3) Working capital management is a key factor in a company's long-term success

5 Governments have a number of economic targets as part of their monetary policy. Which of the following targets relate predominantly to monetary policy? (1) Increasing tax revenue (2) Controlling the growth in the size of the money supply (3) Reducing public expenditure (4) Keeping interest rates low

6. ZPS Co, whose home currency is the dollar, took out a fixed-interest peso bank loan several years ago when peso interest rates were relatively cheap compared to dollar interest rates. ZPS Co does not have any income in pesos. Economic difficulties have now increased peso interest rates while dollar interest rates have remained relatively stable. ZPS Co must pay interest on the dates set by the bank. A payment of 5,000,000 pesos is due in six months' time. The following information is available: Spot rate 12500-12582 pesos per $ Six-month forward rate 12805-12889 pesos per $ Interest rates which can be used by ZPS Co: Borrow Deposit Peso interest rates 100% per year 75% per year Dollar interest rates 45% per year 35% per year

1.What is the dollar cost of a forward market hedge

2 Which of the following is/are correct for both purchasing power parity theory and interest rate parity theory? (1) The theory holds in the long term rather than the short term (2) The exchange rate reflects the different cost of living in two countries (3) The currency of the country with the higher inflation rate will weaken against the other currency

3 What are the appropriate six-month interest rates for ZPS Co to use if the company hedges the peso payment using a money market hedge

4 Which of the following methods are possible ways for ZPS Co to hedge its existing foreign currency risk? (1) Matching receipts and payments (2) Currency swaps (3) Leading or lagging (4) Currency futures

5.ZPS Co also trades with companies in Europe which use the Euro as their home currency. In three months' time ZPS Co will receive 300,000 from a customerr