A company expects to receive €500,000 in 6 months and is concerned about potential adverse movements in the exchange rate. The current exchange rate is 1.2 USD/EUR. Calculate the potential impact on the company’s revenue if the exchange rate moves to 1.1 USD/EUR. Discuss the significance of foreign exchange risk in international business and financial management. Analyze the potential factors that could influence exchange rate movements, such as economic conditions, interest rate differentials, and geopolitical events. Consider the implications of exchange rate changes for the company’s revenue, costs, and overall financial performance. Discuss the strategic importance of managing foreign exchange risk, including using forward contracts, options, and natural hedges. Explain how different hedging strategies can be used to mitigate the impact of exchange rate fluctuations on the company’s financial position. Discuss the limitations of hedging strategies and how they can be complemented with other risk management tools.