JACD Bhd., a Malaysian company based in Selangor, exports to Brunei and is expecting to receive 500,000 Brunei dollars (BND) in 6 months' time. Due to uncertainty in the economy, JACD Bhd. is concerned over the exchange rate fluctuations and would like to hedge the receivable. The spot value of Brunei dollar is MYR3.1200. JACD Bhd. expects that the spot value of Brunei dollar will be MYR3.0400 in 6 months' time. The annual interest rates are presented as below: Malaysian ringgit (MYR): Deposit rate 2% Brunei dollar (BND): 0.8% Borrowing rate 5% 4% There is a 6-month put option available on the Brunei dollar with an exercise price of MYR3.1000 and a premium of MYR0.03. Required: (a) (b) (c) (d) (e) (f) Discuss what action should be taken and determine the amount of ringgit that JACD Bhd. will receive at the end of 6 months if the company undertakes a money market hedge. (12 marks) Determine the amount of ringgit that JACD Bhd. will receive at the end of 6 months (after accounting for the option premium) if the company undertakes a put option hedge. (5 marks) Based on the answers in parts (a) and (b) above, determine and explain the hedging alternative that you would recommend to the company. (3 marks) Explain why, if a 6-month put option on Brunei dollar is not available, JACD Bhd. may cross hedge its Brunei dollar receivable with a Singapore dollar put option. (5 marks) The Covid-19 pandemic situation in Malaysia remains bleak and most areas in Selangor are still under the enhanced movement control order (EMCO). Since JACD Bhd. is concerned that the EMCO in Selangor may affect its production and the company may not able to ship the goods to Brunei on the date promised, a put option hedge would be more suitable than a money market hedge. Do you agree with the above statement? Explain why. (5 marks) A Current account deficit often raises the opposition of protectionists who think that a current account deficit is a bad signal, and a current account surplus is always good. Do you agree with the above statement? Explain why. (10 marks)