CASE 1 Mr Ali need to buy US $ 10000 after two months. For this he booked today dollar at exchange rate of PKR 105/US $ However exchange rate goes to PKR 104/US $ after two months.

Case 2 Mr Ali needs to sell us 10000 after two months. For this he booked today the dollar at exchange rate of PKR 104/ US $. After two months the exchange rate goes to PKR 102/US $

Required

a) Carefully read both cases and identify that MR Ali exposed to which type of foreign exchange risk.

B)Also calculate gain or loss of Mr. Ali in each case.