Question 2 (4 marks) MTB Ltd. is an Australian exporter, sold a special raw material to a manufacturing company based in Switzerland. The sale is
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MTB Ltd. is an Australian exporter, sold a special raw material to a manufacturing 

company based in

Switzerland. The sale is denominated in Swiss francs with 

payment due upon delivery in three (3) months, amount is CHF 200,000.

Required:

a. How can MTB Pty Ltd. use the currency options to hedge foreign-currency 

exposures resulting from international transactions? (2 marks)

b. Describe the key benefit and the key drawback of using currency options 

rather than future and forwards contracts? (2 marksScreenshot_20191001-161514__01.jpg

Screenshot_20191001-161514__01.jpg

Question 2 (4 marks)
MTB Ltd. is an Australian exporter, sold a special raw material to a manufacturing
company based in Switzerland. The sale is denominated in Swiss francs with
payment due upon delivery in three (3) months, amount is CHF 200,000. Required: a. How can MTB Pty Ltd. use the currency options to hedge foreign-currency
exposures resulting from international transactions? (2 marks) b. Describe the key benefit and the key drawback of using currency options
rather than future and forwards contracts? (2 marks) Question 3 (4 marks)

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