Part B Assume that the domestic currency is the Australian dollar (AUD). AIC Mines Limited (an Australian-based multinational corporation) has a Canadian subsidiary (Intrepid Mines Limited), which pays a dividend to the parent company (based in Australia) each year. A dividend of 10 million Canadian dollars (CAD) has been declared now and will be paid to AIC Mines Limited 120 days later. AIC Mines Limited is trying to decide how to manage the foreign exchange exposure associated with the dividend. The currently available data are given below: Spot rates (CAD per AUD) 120-day forward points 120-day CAD interest rates 120-day AUD interest rates 120-day CAD call option strike rate 120-day CAD call option premium 120-day CAD put option strike rate 120-day CAD put option premium CAD/AUD 0.9251 - 0.9335 33-37 4.0% - 4.5% per annum (p.a.) 2.8%-3.3% p.a. CAD/AUD 0.9200 1% CAD/AUD 0.9600 2% Based on the data, explain and calculate the various strategies to manage the foreign exchange exposure associated with the dividend. Which strategy do you think would be better for AIC Mines Limited? Explain your answers clearly and completely. Give your final answers in AUD. Part B Assume that the domestic currency is the Australian dollar (AUD). AIC Mines Limited (an Australian-based multinational corporation) has a Canadian subsidiary (Intrepid Mines Limited), which pays a dividend to the parent company (based in Australia) each year. A dividend of 10 million Canadian dollars (CAD) has been declared now and will be paid to AIC Mines Limited 120 days later. AIC Mines Limited is trying to decide how to manage the foreign exchange exposure associated with the dividend. The currently available data are given below: Spot rates (CAD per AUD) 120-day forward points 120-day CAD interest rates 120-day AUD interest rates 120-day CAD call option strike rate 120-day CAD call option premium 120-day CAD put option strike rate 120-day CAD put option premium CAD/AUD 0.9251 - 0.9335 33-37 4.0% - 4.5% per annum (p.a.) 2.8%-3.3% p.a. CAD/AUD 0.9200 1% CAD/AUD 0.9600 2% Based on the data, explain and calculate the various strategies to manage the foreign exchange exposure associated with the dividend. Which strategy do you think would be better for AIC Mines Limited? Explain your answers clearly and completely. Give your final answers in AUD