Requirement (i)

1 mark per exposure explained 3

Requirement (ii)

Calculation of forward rate 1
Calculation of income using the forward rate 1
Calculation of cash flows using option contracts 3
Discussion of relative merits of forwards and options 2–3
Discussion of alternative hedging possibilities and conclusion 1–2

Max marks 9

Requirement (iii)

Calculation of devalued rate 1
Calculation of translation loss 3
Discussion of whether risk of translation loss should be managed 2–3
Discussion of how risk of translation loss should be managed 1–2

Max marks 8

Requirement (iv)

1 mark per point 3
Professional Marks
Structure and presentation of report 4