is concerned abou between a firm's profit and the exchange rate between US dollars and British pounds Draw an exposure diagram to illustrate the relationship between a gold mining firm's profit and the price of gold in three months Would a call option or a put option hedge the exposure of the firms described in the problems above? Would a long or a short forward position hedge the exposure of the firms above? What is the difference between a forward contract and a swap contract? Fill in the table below describing the payoffs on an interest rate swap contract under each of the scenarios for interest rates. Assume that underthe terms of the swap, Strickler Inc. agrees to pay the swap dealer the six month T-bill rate minus 4% at the end of each of the next three six-month periods and that the notional principal equals $2 million t its costs in dollars. Also draw an exposure diagram to illustrate the relation 3. 4. 5. 6. 7. 6 months 3% 12 months 4% 18 months 4.5% Six-month t-bill Payoff to Strickler Payoff to swap dealer HELP IMPROVE OFFICE 85 1 OF 2 is concerned abou between a firm's profit and the exchange rate between US dollars and British pounds Draw an exposure diagram to illustrate the relationship between a gold mining firm's profit and the price of gold in three months Would a call option or a put option hedge the exposure of the firms described in the problems above? Would a long or a short forward position hedge the exposure of the firms above? What is the difference between a forward contract and a swap contract? Fill in the table below describing the payoffs on an interest rate swap contract under each of the scenarios for interest rates. Assume that underthe terms of the swap, Strickler Inc. agrees to pay the swap dealer the six month T-bill rate minus 4% at the end of each of the next three six-month periods and that the notional principal equals $2 million t its costs in dollars. Also draw an exposure diagram to illustrate the relation 3. 4. 5. 6. 7. 6 months 3% 12 months 4% 18 months 4.5% Six-month t-bill Payoff to Strickler Payoff to swap dealer HELP IMPROVE OFFICE 85 1 OF 2