The COVID-19 pandemic is over, and you decide to celebrate by going on a vacation to China.

The following quotes are provided by a Foreign Exchange (FX) dealer at the airport.

BUY SELL

CNY 5.02 4.91

a)If you are exchanging 30 000 AUD (Australian Dollars), how many YUAN(Chinese Dollars) will you receive?

Showworkingsand aconcluding statementin your response.

b)Upon returningfrom China, you have 7 000 CNY which you wish to convert back to AUD. How much will you receive?

Showworkingsand aconcluding statementin your response.

c)One year later, you are considering moving to Hangzhou to pursue a career with Alibaba. You check the exchange rates quoted by the same FX dealer at the airport. To your surprise, the rates have dramatically changed.

The following quotes are provided by a Foreign Exchange (FX) dealer at the airport.

BUY SELL

CNY 4.53 4.31

What conclusions about the strength of the Australian dollar can be drawn from comparing the current exchange rates with one year ago? Will you receive more or less CNY if you exchanged the same amount of money as you did one year ago?(2 marks)

d)You are considering starting your own business, which will require importing goods from Vietnam. You are quite concerned about the fluctuating exchange rate and the effect it will have on your cash flow. Identify and discuss the features of a type of foreign exchange contract that you can enter into which will address your concerns about the exchange rate.

e)Classify the following transactions as either:

(i) Primary or secondary market

(ii) Money or capital market

(iii) Wholesale or retail market, and

(iv) Direct or indirect market.

Transaction 1:The Australian government issues new 10-year bonds totaling $1 000 000.

Transaction 2:An investor purchases $20 000 worth of ZIP Pay (Z1P) shares on the ASX via a private placement.