Hedge against this foreign currency exposure, Financial Management

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Question:

Part A:

Justify and criticize the usual assumption made in Financial Management literature that the objective of a firm is to maximize the wealth of its shareholders. You are not expected in your answer to consider the problems of how this wealth is to be measured.

Part B:

X Co.Ltd., a Mauritian Company has to make payment of 3million US Dollar after 6 months against import of plant and machinery. What are the different alternatives to hedge against this foreign currency exposure? Give supporting explanations.


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