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 David is the treasurer of an Australian company exporting silicon

to the United States. His counterparty is expected to pay his company USD1,000,000.00 on 11 Dec 2020. David wants to lock today's exchange rate. (a) Discuss how you, as his risk management consultant, would do to hedge the company's foreign exchange exposure. (b) Suppose David decides not to hedge this foreign exchange rate risk. Based on the past 5 year historical AUD/USD data (stored in 'AUD.csv'), at least how much do you expect this trade will lose in AUD in the worst 5% scenario? Assume that, at 11 Sept 2020, the closing adjusted AUD/USD is 0.73.

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David is the treasurer of an Australian company exporting silicon to the United States. His counterparty is expected to pay his company...
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