Based on your knowledge of course materials and understanding on the economic situation to answer this question. Assume that you decide to buy an apartment in Japan, i) you would like to finance it by borrowing Japanese Yen or Hong Kong dollars? ii) Why?

iii) What are the potential risks if you decide to finance it with Hong Kong dollars? iv) Would you consider to use futures to hedge against those risks and how? v) Why?

• The total word count for this question (i+ii+iii+iv+v) should not exceed 250 words. Any word exceeded the limit will not be marked.

1. You would like to finance it by borrowing Japanese Yen or Hong Kong dollars.

2. What is the reason behind your answer in part (i)?

3. What are the potential risks if you decide to finance it with Hong Kong dollars?

4. Would you consider to use futures to hedge against those risks and how?

5. What is the reason behind your choice in part (iv)?