URGENT!! You are based in Glasgow, Scotland and your home currency is the Pound Sterling. You are given the following exchange rates for a particular month:

Question Three (18 Marks) Part A You are based in Glasgow, Scotland and your home currency is the Pound Sterling. You are given the following exchange rates for a particular month: Beginning of month: 0.4276/A$1.00 End of month: 0.4125/A$1.00 Did the Australian Dollar appreciate or depreciate against the Pound Sterling over the month? By what percentage has the Australian Dollar changed in value against the Pound Sterling? (3 Marks) Part B Operating exposure can be partially managed by adopting strategies that offset anticipated foreign exchange exposures. Name any four commonly employed proactive policies and briefly explain them by using examples. (7 Marks) Part C Use the balance of payment (BOP) identity to illustrate how a central bank utilises foreign reserve to manage the value of domestic currency in a fixed exchange rate regime. (4 marks) Part If expected inflation for the coming year is 3%, what nominal interest rates should an investor receive if he was to realise a real interest rate over that holding period of 1%. What theory are you using to answer that question? (4 marks)