Please help me how to properly answer this question!

Question 1

Bridgestone, a Japanese-based company, receives recurring income in USD of about

USD 5 billion per year. The current exchange rate is 120/USD. The interest rates in

Yen and USD are respectively 0.5% and 3.5%, leading to a forward price of

116.52/USD. Bridgestone works in a low-margin industry.

A. Assume the quarterly exchange rate volatility equals 5%. Assume furthermore the

exchange rate follows a random walk, so that the expected currency return equals

zero. Calculate the annualized cash flow at risk at the 5% and 1% level. Interpret

your findings.