Hong Kong Business Aviation Company (HKBAC) is in the business of leasing private business jet planes to wealthy and privileged customers so that they could enjoy the luxurious and personalized flight experience. HKBAC has incurred huge costs in regularly updating its fleet and paying for the rising fuel costs. Three new private business jet planes have been ordered from a Canadian aircraft manufacturer. HKBAC has to pay for that in the Canadian dollar in one years time.

Required:

1. (a) To manage the risk associated with foreign exchange exposure, what actions that HKBAC can take to get the Canadian dollar required to make the payment? (10 marks)

2. (b) Suggest and explain what common fuel hedging tools that HKBAC can use to deal with fuel price exposure.