1. How can the Sports Exports Company use currency futures contracts to hedge against exchange rate risk? Are there any limitations when using currency futures contracts that would prevent the firm from locking in a specific exchange rate at which it can sell all the pounds it expects to receive in each of the upcoming months?

2. How can the Sports Exports Company use currency options to hedge against exchange rate risk?

3. Are there any limitations of using currency options contracts that would prevent the Sports Exports Company from locking in a specific exchange rate at which it can sell all the pounds it expects to receive in each of the upcoming months?

4. Jim Logan, owner of the Sports Exports Company, is concerned that the pound may depreciate substantially over the next month, but he also believes that the pound could appreciate substantially if specific situations occur. Should Jim use currency futures or currency options to hedge the exchange rate risk? Is there any disadvantage when selecting this method for hedging?