A French exporter of wine to Australia is concerned about foreign exchange risk for settlement of $10 million AUD of income in 6 months time and the current spot rate is EUR/AUD 1.45. Current interest rates in Australia is 3.10% while in France it is 2%. Over the next 6 months, both the European Central Bank and the Reserve Bank of Australia are expected to increase rates by 25 basis points. Calculate the implied 6-month forward rate using covered interest parity (CIP) for EUR/AUD and using this rate, the amount of EUR to be received is (5 marks). Given that the CIP forward rate is an expectation of the future spot rate in 6 months, the exporter faces (1 mark) risk from the expected (1 mark) EUR to the (1 mark) AUD. Two alternatives are to hedge the exposure at a bank 6-month forward rate of EUR/AUD 1.46 or leave the \$10 million AUD income unhedged, to be settled at the expected future spot rate as given by CIP. I recommend (1 mark) as this will result in being EUR (1 mark) better off