Question Two Kings Ltd a UK Firm bought goods on credit from a USA supplier worth US $350,000 payable in 6 Months time from now in US Dollars. The finance Manager of the firm is worried that the cost of these supplies in Euros may rise and has decided to hedge the currency exposure of this account payable. The following information has been provided by the firms banker: Spot Exchange rate ($ / 1 Euro () 1.166 Six Months forward rate ($/1 Euro () 1.155 The Money market rates applicable Borrowing rate Deposit rate Annual Interest rate in Euros ( ) 10 % 6 % Annual Interest rate in Us Dollar ($ ) 6 % 4% 3 Required: Show how the firm can use a forward market hedge and a money market hedge in order to hedge the currency exposure. (Total: 15 Marks)