The foreign exchange market is a global decentralized market that provides the physical and institutional structure through which currencies are traded. It assists international trade and investments by enabling currency conversion. Exchange rate is the price of one currency expressed in terms of another currency. Exchange rate is determined by the supply and demand of each countrys currency. Currencies can be traded in the spot or forward market. In the spot market, trades are made for immediate delivery. In the forward market, trades are made for future delivery according to an agreed-upon delivery date, exchange rate and amount. When the transaction costs of trading is ignored, the cross rate of different currencies can be calculated. In most currency markets, many currency pairs are inactively traded and so their exchange rate can be determined through their relation relative to a widely traded third currency. A cross exchange rate is an exchange rate between a currency pair where the rates against some common currencies are provided. a) The following information is provided by a retail bank in Kuala Lumpur. There are four different exchange rate circumstances for currency transaction. Bank Quotation Bid Ask British pounds 5.4550 5.4860 US dollars 4.0680 4.1100 Questions: a. Calculate based on the given information for the four different exchange rate circumstances for currency transaction. (9 marks) i) A customer wants to purchase 1,000,000 for an import shipment due. Estimate the amount that customer must pay in ringgit for this transaction.ii) An exporting customer wishes to sell USD800,000 for ringgit. Calculate the amount that customer will receive. iii) Mr Tan wants to sell 1,000,000 for dollars for an investment in New York. Compute the dollars Mr Tan will receive. iv) Mr Ali wishes to sell USD2,000,000 for pounds. Determine the amount Mr Ali will receive. Also answer the following questions based on the rubric. (16 marks) b. As we know that exchange rates fluctuate due to many factors. Discuss in detail four (4) common theories that explain movements in exchange rates. c. In your viewpoint, recommend effective strategies to curtail exchange rate risks for the MNC. Provide four (4) constructive points for this question.