SMU Corp. has future receivables of 4 million New Zealand dollars (NZ$) in one year. It must decide whether to use options or a money market hedge to hedge this position. Use any of the following information to make the decision. Verify your answer by determining the estimate (or probability distribution) of dollar revenue to be received in one year for each type of hedge.

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S.54 Spot rate of NZs One-year call option One-year put option Exercise price $.50; premium -S.OT Exercise price S.52 premium $.03 New Zealand One-year deposit rate 9% 6% One-year borrowing rate Rate S.50 51 .53 Probability 20% 50 30 Forecasted spot rate o NZS