Problem 3: You have been hired as a risk management consultant by a mid-market firm (i.e., a midsize firm - not super large, but not small either). They make disposable baby diapers and other disposable products for the newborn to toddler market. They are very proud of the fact, which they include in their advertising, that all their products are made in the United States and sold in the United States. They use American labor and employ inputs that are also produced in the United States. Presently, this company has 20% of the U.S. market for its product lines. Roughly 75% of the products sold by its competitors are made overseas, mostly in China. As an encouragement to carry its product lines, the firm borrows money in the U.S. at a floating rate of interest and lends it to its customers at a fixed rate of interest in amounts sufficient to cover their inventory purchases of the firm's products. A. Based on what you have heard, does this firm have any foreign exchange rate risk exposure? If so, explain how it can be so even if all inputs are purchased in the United States and all output is sold in the United States. Keep your answer to no more than 70 words. B. Does this company's strategy of cementing its business relationships with its customers by lending them sufficient funds to purchase the company's products expose the firm to any risks? Explain at least two of them in 70 words or less. Problem 3: You have been hired as a risk management consultant by a mid-market firm (i.e., a midsize firm - not super large, but not small either). They make disposable baby diapers and other disposable products for the newborn to toddler market. They are very proud of the fact, which they include in their advertising, that all their products are made in the United States and sold in the United States. They use American labor and employ inputs that are also produced in the United States. Presently, this company has 20% of the U.S. market for its product lines. Roughly 75% of the products sold by its competitors are made overseas, mostly in China. As an encouragement to carry its product lines, the firm borrows money in the U.S. at a floating rate of interest and lends it to its customers at a fixed rate of interest in amounts sufficient to cover their inventory purchases of the firm's products. A. Based on what you have heard, does this firm have any foreign exchange rate risk exposure? If so, explain how it can be so even if all inputs are purchased in the United States and all output is sold in the United States. Keep your answer to no more than 70 words. B. Does this company's strategy of cementing its business relationships with its customers by lending them sufficient funds to purchase the company's products expose the firm to any risks? Explain at least two of them in 70 words or less