In 2004, Volkswagen, a successful European largest carmaker reported a 95 drop in 2003 fourth quarter profits which slumped from 1.05 billion to a mere 50 million. Although the profit slump had multiple causes, two factors were the focus of much attention the unprecedented rise in the value of the euro against the dollar during 2003, and Volkswagens decision to hedge only 30 percent of its foreign currency exposure, as opposed to the 70 percent it had traditionally hedged. For Volkswagen, which made cars in Germany and exported them to the United States, the fall in the value of the dollar against the euro during 2003 was devastating. Answer the following questions based on the above extract. a. Explain how the fall in the value of the dollar against the euro affected Volkswagens earnings. (60 words) b. Identify and explain two hedging tools Volkswagen can adopt to insure against foreign exchange rate risk. (150 words) c. What possible reason would cause Volkswagen to decide to hedge less than it usually did. (50 words)