1. Suppose Boeing Corporation exported a Boeing 787 to British Airway and billed 15 million payable in one year (i.e., Boeing has a 15 million receivable in one- year). The money market rates, foreign exchange rates, and option prices are given as follows: The U.S. one-year interest rate: 3% per annum The U.K. one-year interest rate: 4.5% per annum The spot exchange rate: $1.35/E One-year forward rate: $1.32/ Call option: exercise rate: $1.32, premium: 0.02/E Put option: exercise rate: $1.32, premium: 0.03/ (1) Show the money market hedge strategy (i.e., through borrowing/lending) that the company can use to hedge the company's transaction exposure. Be sure to include the following. (a) SI State which currency Boeing should borrow and which to invest. Calculate how much Boeing should borrow or invest. State the transactions needed to be done and the cash flows at t=0 and t=1 (1.e., today and one-year from today) by constructing a cash flow table. State the dollar value of the net cashflow at t=1 (d) (2) What is the value with option hedge if the predicted spot rate in 1-year is $1.30? Between forward hedge, money market hedge, and option hedge, which one is preferable and why