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SkillWeave Industries are focused on managing the risk of selling their cars to the region due to economic turmoil, and have now begun using funds from sales in the region to fund supplier purchases from that region to

reduce the risk from the volatile currency. However, SkillWeave want to go a step further and make the risk even less sizeable.

Which of the following is a method by which SkillWeave can operate in the market and transfer the risk of exchange rate exposure to another party?

Options:

Invoice international sales in domestic currency

Temporarily stop operating in that target market

Arrange a forward foreign exchange rate contract agreeing to buy a given amount of the foreign currency in 3 months time for a fixed exchange rate based on current rates

Put a sale on all vehicles stationed in the region to clear stock quickly

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Question 2

Which of the following correctly defines the expected value of a project?

Options:

The weighted average of the possible outcomes of the project.

The actual amount of incremental wealth that the project will generate.

The most likely amount of incremental wealth that the project will generate.

The present value of the positive cash flows that the project will generate.

Question 3

Endure Co. makes 1,000 units ofX and 2,000 units of Y.

Costs for X: Material $4, labour $8, direct overhead $2, fixed cost $4.

Costs for Y: Material $9, labour $9, direct overhead $4, fixed cost $6.

Selling price for X and Y are S19 and $25 respectively. Another company can sell ready made product X and product Y's to Endure Co, this company sells X at $12 and Y at $21. Advise Endure Co. on what would be the

most cost effective way to source products X and Y.

Options:

Endure should buy X and Yfrom the other supplier.

Endure should buy X but produce Y themselves.

Endure should produce both X and Y themselves.

Endure should buy Y but produce X themselves.

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