You are the financial manager of Ashdown plc: a US company which has just signed a contract for the sale of a computer s

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You are the financial manager of Ashdown plc: a US company which
has just signed a contract for the sale of a computer system in the
UK for £3,000,000 in a year’s time. You have collected the
following data relevant to this project • Spot exchange rate: $1.2
= £1 • One year forward exchange rate $1.4 = £1 • UK one year
interest rate 8% • US one year interest rate 10% • Price of a put
option for £3,000,000 at an exercise price of $1.3 per pound:
£400,00
(1) How should Ashdown manage the risk arising out of this
contract? Discuss and evaluate at least three choices. What is your
recommended strategy? Give reasons for your answer. Your answer
needs to include all calculations. • (2) In what ways does the
exposure faced by Ashdown here differ from other kinds of exposure
and what is the impact of this difference on the risk management
strategy you have recommended?
What is the answer for question 2?