As treasurer of a large Malaysia corporation, you must decide how best to manage the firm's

cash flows to maximize profits, subject to maintaining an acceptable level of risk. Your firm

has an account payable to a Japanese firm of 2,000,000 Yen due in 180 days.

Review the options available for managing this foreign currency liability. And is there any

reason to prefer one course of action over another for the following situations:

(i) You could rely on the spot market and buy the Yens any time in the next 180 days;

(4 marks)

(ii) You could buy the Yens today in the forward market; (4 marks)

(iii) You could buy a call option for the Yens. (4 marks)