Subject: International Finance

Leguna Gma Inc. (LG), a U.S firm had delivered a large shipment of sports equipment to Tneme sport Ltd. (TS) in Malaysia. TS is noticed to settle the full payment in 90 days with total amount of MYR 135 million. LG is concerned to hedge against the currency exposure. Currently, LG has no cash surplus and will raise new capital from borrowing. The information are given as follows: Section B Q3. (b) (Continued) Reyuncu. Using money market, option market and forward market, evaluate which is the best hedging strategy for LG to manage its currency exposure. (20 marks) Leguna Gma Inc. (LG), a U.S firm had delivered a large shipment of sports equipment to Tneme sport Ltd. (TS) in Malaysia. TS is noticed to settle the full payment in 90 days with total amount of MYR 135 million. LG is concerned to hedge against the currency exposure. Currently, LG has no cash surplus and will raise new capital from borrowing. The information are given as follows: Section B Q3. (b) (Continued) Reyuncu. Using money market, option market and forward market, evaluate which is the best hedging strategy for LG to manage its currency exposure. (20 marks)