Question 2 (25 points) A firm based in South Africa agrees to buy 10 million Euros worth o:f goods from a firm based in Germany. The South African firm agrees to pay in Euros in 60 days You are the CFO of the South African firm. You know that the Euro has been strengthening against the Rand and expect this trend to continue for at least the next 60 days a. Describe in detail three hedging strategies you would consider using to ensure that when your firm makes the payment in Euros 60 days from now, it minimizes its risk of loss converting Rand to Euros. (15 points) c. a. d. Does this problem illustrate translation or transaction risk? (5 points) a. Briefly describe the difference between hedging and speculation. (5 points) e. Question 2 (25 points) A firm based in South Africa agrees to buy 10 million Euros worth o:f goods from a firm based in Germany. The South African firm agrees to pay in Euros in 60 days You are the CFO of the South African firm. You know that the Euro has been strengthening against the Rand and expect this trend to continue for at least the next 60 days a. Describe in detail three hedging strategies you would consider using to ensure that when your firm makes the payment in Euros 60 days from now, it minimizes its risk of loss converting Rand to Euros. (15 points) c. a. d. Does this problem illustrate translation or transaction risk? (5 points) a. Briefly describe the difference between hedging and speculation. (5 points) e