I1

4) Assume that the National Party Congress in China has banned the conversion of US dollars and any associated derivatives. Huawei, a Chinese company, has offshore revenues of US $ 2 bn that it needs to hedge. Of the currencies listed below, which is the most optimal currency to hedge US dollar revenues?

a) Japanese yen

b) US dollar put options

c) Hong Kong dollars

d) Canadian dollars

e) South Korean won

5) HSBC Holdings reports in US dollars, and the Mexican peso declines 50%. If HSBC Mexico represents 50% of HSBC Holdings' total equity, what happens to the value of HSBC Holdings' equity value?

a) Increases 50%

b) Decreases 50%

c) Increases 25%

d) Decreases 25%

e) Nothing

6) American firm, Nighthawk Capital's investment portfolio has $1 billion in assets under management. It's constitution documents require it to be US dollar neutral. In anticipation of China's Ping An Insurance failing, Nighthawk Capital shorts $200 million H-shares (Hong Kong-listed). What will Nighthawk Capital need to do to remain US dollar neutral after this trade?

a) Buy onshore Chinese renminbi

b) Sell onshore Chinese renminbi

c) Buy offshore Chinese renminbi

d) Sell offshore Chinese renminbi

e) Nothing