1. How might a futures contract be used to manage the possible effects of volatile import prices - what are the advantages and disadvantages?

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1. How might a futures contract be used to manage the possible effects of volatile import prices - what are the advantages and disadvantages? 2. As the changes against the pound (GBP) do not represent interest rate differentials, does this mean that the International Fisher Effect is irrelevant? Explain and discuss in relation to the concept of an efficient market. 3. Explain how a range forward or cylinder type option contract with a bank might have helped a UK based company importing goods from the US over the past year. 4. Discuss whether the risks of foreign direct investment into a developing country outweigh the benefits of diversification, for a multinational company from a developed country? 5. Compare and contrast the use of derivatives with non-market methods to manage exchange rate risk and commodity price variation in international trade

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