Mr. Sultan has bought a JBL Boombox, for HKD 2,000, PlayStation for HKD 4,000, and three Briefcases for HKD 25,000, during a shopping spree in Hong Kong. The spot exchange rate is HKD/AUD 5. (A) What should the Price JBL Boombox, PlayStation, and three Briefcases cost in Australia? (B) Suppose Mr. Sultan is stopped at customs as he arrives in Sydney, and must pay import duties of 20 percent. If the same JBL Boombox, PlayStation, and three Briefcases cost AUD 450, AUD 1,500, and AUD 8,000 in Australia, respectively, was his shopping spree worth at least the HKD 10,000 paid for airfare and hotels during his trip?

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A:

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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.