Games of Bones is a local business that manufactures of board games. They sell their product in Canadian Dollars. A lot of the raw materials are purchased from India in rupees. When hedging their risk with the bank, Game of Bones should take the following position with the bank The short position in Indian Rupee The long position in Canadian Dollars Both A & B Neither A or B

Games of Bones is a local business that manufactures of board games. They sell their product in Canadian Dollars. A lot of the raw materials are purchased from India in rupees. When hedging their risk with the bank, Game of Bones should take the following position with the bank The short position in Indian Rupee The long position in Canadian Dollars Both A & B ONeither A or B Question 2 10 points Save Answ Suppose that you work for a company that uses $2 Million in raw sugar as part of their product. Sugar as a cost accounts for less than 0.05% of the company's revenue. You believe that this the company should hedge this risk but the CFO does not share your view. His response to the risk is, $2M is fairly small and immaterial to the company's bottom line. Furthermore he tells you that the price of raw sugar has stayed the same for ten years so there is nothing to worry about. The CFO is: Correct in that though the company uses a lot of sugar, fluctuations in sugar pricing will not impact the company's bottom line materially. Correct in that the price of sugar doesn't really change. Only commodities that are volatile should be hedged against. The CFO is incorrect, all financial risks regardless of materiality should be hedged against. Materiality is an accounting term not finance. The CFO is correct about both a & b. Question 3 10 points The initial margin in the futures market helps the market in that Credit risk is eliminated Participants are able to hedge their risks with minimal cash flow Helps standardize all the transactions in the market All of the above