Misato Katsuragi is the treasurer of a Japanese company exporting electronic equipment to the United States. Her counterparty is expected to pay her company US$1,000,000.00 on 319 March 2021. Ms Katsuragi wants to lock the exchange rate for today. (a) Discuss how you, as her risk management consultant, would design a foreign exchange hedging strategy and name the instrument(s) you would use. State also the number of contracts that you need. (b) Suppose Ms Katsuragi decides not hedge this foreign exchange rate risk. Based on the past 5-year historical data with the normality assumption imposed whenever necessary, at least how much do you expect this trade will lose in JPY in the worst 5% scenario? On 24th January 2021, the mid USD/JPY rate closes at 103.75, which you may adopt it as the benchmark. Misato Katsuragi is the treasurer of a Japanese company exporting electronic equipment to the United States. Her counterparty is expected to pay her company US$1,000,000.00 on 319 March 2021. Ms Katsuragi wants to lock the exchange rate for today. (a) Discuss how you, as her risk management consultant, would design a foreign exchange hedging strategy and name the instrument(s) you would use. State also the number of contracts that you need. (b) Suppose Ms Katsuragi decides not hedge this foreign exchange rate risk. Based on the past 5-year historical data with the normality assumption imposed whenever necessary, at least how much do you expect this trade will lose in JPY in the worst 5% scenario? On 24th January 2021, the mid USD/JPY rate closes at 103.75, which you may adopt it as the benchmark