5. As an importer of grain into Japan from the United States, you have agreed to pay $377,287 in 90 days after you receive your grain. You face the following exchange rates and interest rates: - spot rate Y106.35$; - 90-day forward rate Y106.02S : - 90-day USD interest rate 3.25% p.a.; - 90-day JPY interest rate 1.9375% p.a. Using these data, answer the following questions: (a) Describe the nature and extent of your transaction foreign exchange risk. (b) Explain two ways to hedge the risk. (c) Which of the alternatives in part b is superior? 4. As a trader for Goldman Sachs, you see the following prices from two different banks: - 1-year euro deposits/loans: 6.0%6.125% p.a. - 1-year Malaysian ringgit deposits/loans: 10.5\%-10.625\% p.a. - Spot exchange rates: MYR4.6602EUR-MYR4.6622EUR - 1-year forward exchange rates: MYR4:9500EUR-MYR4.9650EUR The interest rates are quoted on a 360-day year. Can you do a covered interest arbitrage