A New Zealand-based business has exported goods to Canada and will receive payment of CAD 620.000 in three months' time. The spot exchange rate and the 3-month annualised money market rate are: 1 Canadian dollar traded at NZ$1.076 3 month New Zealand money market rate: 2.83% 3 month Canadian money market rate: 1.17%. a) Explain the exchange rate risk to which New Zealand companies are exposed. b) Explain the terms of a money market hedge undertaken by the New Zealand company to fix the exchange rate of CAD 620.000. Specify the fixed forward rate provided by this hedge.. c) Assume that the actual spot exchange rate after three months is NZ$1.1200. Explain whether the forward rate is favourable to the company and assess whether it is correct to enter into a forward exchange..