Thx for ur patience and help

Question 4 a) 'When the inflation rate in Australia is relatively higher than the inflation rate in the USA, the value of the Australian dollar will increase relative to the US dollar.' Comment on the above statement using the theory that explains the adjustment of foreign exchange rates. (Word limit: 150 words) b) Discuss the types of exchange rate risks a multinational shipping company may face and explain how the company would manage these risks. Use examples to support your discussion. (Word limit: 250) An Australian airline company has just entered a contract to purchase a new fleet of airplanes for 2 billion US dollars (USD) and the current exchange rate is AUD/USDO.74. The company must pay for the fleet in six months' time. The airline company considers hedging its exposure to foreign exchange risk by using an option. The company has the following information on the two types of option. Currently a call option on USD that expires in 6 months has an exercise price of AUD/USDO.70 and a premium of AUDO.01. Currently a put option on USD that expires in 6 months has an exercise price of AUD/USD.72 and a premium of AUDO.01. 1) Which type of option should the company use? Why? ii) If the actual exchange rate in six months' time is AUD/USD 0.67, explain how the hedge has protected the company from its exposure to exchange rate fluctuation. il) If the actual exchange rate in six months' time is AUD/USDO.76, explain how the hedge has protected the company from its exposure to exchange rate fluctuation