XYZ ltd is a Dutch manufacturer .The company has the following JPY commitments:

1. Account receivable of JPY 10000000 for thirty days
2. Account receivables of JPY 500000FOR ninety days.
3. Sales contract (12 months) of JPY 30000000
4. A forward sales contract of JPY 500000 for 90 days
5. Account payables of JPY 10000000 for 30 days
6. A deposit that at maturity in three months pays JPY 500000
7. A loan for which XYZ ltd will owe JPY 8000000 in 6 months
8. Account payable of JPY 3000000 for six months
9. A forward sale contract of JPY 100000000

Required

Determine XYZ net exposure for each maturity

Explain how XYZ Ltd would hedge the exposure for each maturity on forward market

Assume that interest rate is 5% p.a for all maturities (computed annually).Explain how the company would hedge its exposure on the spot money market and on the JPY money market.

Show your workings

Eurocurrency or Eurobond markets. Briefly discuss the main arguments for the use of fixed exchange rates and floating exchange rates, and the implications of these different exchange rate mechanisms for multinational companies. (8 martes) QUESTION THREE XYZ Lid is a Dutch manufacturer. The company has the following JPY commium -) Account receivables of JPY 1,000,000 for thirty days. ii) Account receivables of JPY 500,000 for ninely days. iii) Sales contract (twelve months) of JPY 30,000,000 iv) A forward sales contract of JPY 500,000 for ninety days. v) A deposit that at maturity, in three months pays JPY 500,000. vi) Alonn for which XYZ Itd will owe JPY 8,000,000 in six months. vii) Account payables of JPY 1,000,000 for thirty days. viii) A forward sales contract of JPY 10,000,000 Tor twelve months. ix) Account payable of JPY 3,000,000 for six months. - -- Required: a) -- b) market. Determine XYZ net exposure for each maturity. (8 marks) Explain how XYZ Ltd would hedge the exposure for each maturity on the forward .. (5 marks) Assume that interest rate is 5% p.a for all maturities (compounded annually). Explain how the company would hedge its exposure on the spot money market and on the JPY 'money market. (Shu Wercing (12 marks) -- - QUESTION FOUR Pin African Ltd is a Kenya multinational company with subsidiary in Tanzania. The onartunity to invest in a project costing Tsh.500 million. The hrdiny will use Tsh.100 million Eurocurrency or Eurobond markets. Briefly discuss the main arguments for the use of fixed exchange rates and floating exchange rates, and the implications of these different exchange rate mechanisms for multinational companies. (8 martes) QUESTION THREE XYZ Lid is a Dutch manufacturer. The company has the following JPY commium -) Account receivables of JPY 1,000,000 for thirty days. ii) Account receivables of JPY 500,000 for ninely days. iii) Sales contract (twelve months) of JPY 30,000,000 iv) A forward sales contract of JPY 500,000 for ninety days. v) A deposit that at maturity, in three months pays JPY 500,000. vi) Alonn for which XYZ Itd will owe JPY 8,000,000 in six months. vii) Account payables of JPY 1,000,000 for thirty days. viii) A forward sales contract of JPY 10,000,000 Tor twelve months. ix) Account payable of JPY 3,000,000 for six months. - -- Required: a) -- b) market. Determine XYZ net exposure for each maturity. (8 marks) Explain how XYZ Ltd would hedge the exposure for each maturity on the forward .. (5 marks) Assume that interest rate is 5% p.a for all maturities (compounded annually). Explain how the company would hedge its exposure on the spot money market and on the JPY 'money market. (Shu Wercing (12 marks) -- - QUESTION FOUR Pin African Ltd is a Kenya multinational company with subsidiary in Tanzania. The onartunity to invest in a project costing Tsh.500 million. The hrdiny will use Tsh.100 million