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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
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 |
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