=+a A UK company exports machine parts to South Africa on three months' credit.

The invoice totals R150m and the current spot rate is R7.46/f. Exchange rates have been volatile in recent months and the directors are concerned that forex rates might move so as to make the export deal unprofitable. They are consider-

ing three hedge strategies:

forward market hedge;

money market hedge;

option hedge.

Other information:

three-month forward rate: R7.5/6;

interest payable for three months' borrowing in rand: 2.5 per cent;