1. Suppose that you will receive 30 MM [AUD] in two months, the AUD futures contract expiring in two months is 1.0107 [USD/AUD], the spot price in three months can take the value 1.027 [USD/AUD] with probability 0.6 or 0.9705 [USD/AUD] with probability 0.4. Decide if it is best to do nothing, enter into a futures contract or buy an option, rank the alternatives. The option prices are:

STRIKE PRICE	CALLS	PUTS
[cents/AUD]	[cents/AUD]	[cents/AUD]
96	4.76	0.15
100	1.3	0.67
108	0.08	7.61