1 Foghat Co. has 1,000,000 euros as receivables due in 30 days, and is certain that the euro will depreciate substantially over time. Assuming that the firm is correct, the ideal strategy is to:

2 Money Corp. frequently uses a forward hedge to hedge its Malaysian ringgit (MYR) receivables. For the next month, Money has identified its net exposure to the ringgit as being MYR1,500,000. The 30-day forward rate is $.23. Furthermore, Money's financial center has indicated that the possible values of the Malaysian ringgit at the end of next month are $.20 and $.25, with probabilities of .30 and .70, respectively. Based on this information, the revenue from hedging minus the revenue from not hedging receivables is____.

3

A U.S. corporation has purchased currency put options to hedge a 109,558 Canadian dollar (C$) receivable. The premium is $0.04 and the exercise price of the option is $0.81. If the spot rate at the time of maturity is $0.75, what is the net amount received by the corporation if it acts rationally (round to a dollar)?

4

Assume that Patton Co. will receive 100,000 New Zealand dollars (NZ$) in 180 days. Today's spot rate of the NZ$ is $.50, and the 180-day forward rate is $.51. A put option on NZ$ exists with an exercise price of $.51, a premium of $.02, and a 180-day expiration date. The forecasted spot rate of the NZ$ in 90 days is $0.48 with probability 10%, $0.49 with probability 60%, and $0.55 with probability 30%. The probability that the put option will be exercised is ______. The estimated cost of currency put hedge in $ is _____.