Answer the following short essays? 5 points (1 point each)

A.Explain the difference between a natural hedge and a contractual hedge. Provide a hypothetical example.

The difference between a natural hedge and a contractual hedge is that a natural hedge refers to an offsetting operation.For example, a natural hedge would be mitigating your risk with one stock by choosing another that is negatively correlated to reduce your risk exposure.A contractual

B.Explain the difference between foreign currency options and forwards. Explain when either might be most appropriately used.

C.Define and explain the theory of comparative advantage. What are the major limitations of the theory in explaining international trade?

D.Define and explain Yen carry trade

E.Define and explain Exchange rate pass-through