1.) Michelle Industries issued a Swiss francdenominated 5-year discount note for SFr200 million.

The proceeds were converted to U.S. dollars to purchase capital equipment in the United States.

The company wants to hedge this currency exposure and is considering the following alternatives:

-At-the-money Swiss franc call options.

-Swiss franc forwards.

-Swiss franc futures.

a.) Contrast the essential characteristics of each of these three derivative instruments.

b.) Evaluate the suitability of each in relation to Michelles hedging objective, including both advantages and disadvantages.

2.)Does the use of universes of managers with similar investment styles to evaluate relative investment performance overcome the statistical problems associated with instability of beta or total variability?