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QUESTION 2 (DERIVATIVE SECURITIES) An Australian mining company exports iron ore to other countries, such as China, South Korea and Japan. Its annual report states

QUESTION 2

(DERIVATIVE SECURITIES)

An Australian mining company exports iron ore to other countries, such as China, South Korea and Japan. Its annual report states that the company is exposed to the risk of falling oil prices, increasing interest rates and exchange rates fluctuations of various foreign currencies. Discuss derivative products that can be used to hedge these risks? [3 marks]

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