An Airline has been buying jet fuel. The company wishes to enter into futures market to buy jet fuel. It has been observed that the correlation coefficient between the Kenya shillings and the USA dollar was -0.32. It was also known that risk of Kenya shillings and USA dollar were 0.06 and 0.04, respectively. In the future markets Jet fuel is sold in units of 1,000 barrows. The over ll demand of jet fuel by the airline was 330,000000 barrows of jet fuel. Required: (a) Compute and Comment of the Hedge ratio (b) Compute the Number of lot of jet fuel barrows would be hedged against

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Exchange Rate Risk

It is the possibility that the value of a currency will fluctuate in the future. In the wake of globalization, business establishments have increasingly ventured into international markets. The volume of international trade has prospered excellently in the near past and is expected to be more affluent in the future. The use of exchange-traded derivative financial instruments has been multi-folded to provide for the requirements of various MNCs and offshore potential investors. Most banks and financial institutions have helped integrate the global economies. Our Government has introduced some bold and extreme measures to fulfil the purpose behind the fiscal, industrial, and monetary policies. The enactment of GST is a huge step towards streamlining the taxation system of the country. Owing to Covid-19, this aspect of corporate risk management has become critical.