1. Tristar, Inc. (a US corporation) has sold some heavy machinery to an Italian company for 2,000,000 euros, with the payment to be received in 6 months. Because this is a sizable contract for the firm and because the contract is in euros rather than dollars, Tristar is considering several hedging alternatives to reduce the exchange rate risk arising from the sale. To help the firm make a hedging decision you have gathered the following information.

The spot exchange rate is $1.0512/