1. Dow is a US company. It will pay 1,000,000 Euros in half a year, using US dollars. US interest rate is 8% per year. Currently, the spot rate is 1.25 $/Euro, the half-year forward rate is 1.25 $/Euro. A call option on Euro with a strike price of 1.25 $/Euro has an option premium of 2%. A put option on Euro with a strike price of 1.25 $/Euro has an option premium of 2%. Both options expire in a little bit more than half a year. Should Dow buy a put or a call, for option hedging? Please calculate the breakeven rate between option hedge and forward hedge (i.e., the spot exchange rate half a year from now, that will make the option and forward have the same outcome.)