2. A U.S.-based MNC is expecting a cash inflow of A$108 million (A\$ is Australian dollar) in three months. The MNC decides to hedge with options. The spot rate is $0.6220/A. Available to the MNC are call options with three-month expiration, an exercise price of $0.6290/A$, and a premium of $0.0056/A$; and put options with three-month expiration, an exercise price of $0.6290/A$, and a premium of \$0.0048/A\$. The three-month interest rates in the U.S. are 5.20% p.a. (deposit) and 6% p.a. (loan) and in Australia are 4% p.a. (deposit) and 5% p.a. (loan). If the MNC decides to hedge with options, what option should it buy and how much would its cash inflow be worth in three months if it ends up exercising its option? a. Calls; $68,536,800 b. Puts; $67,405,824 c. Calls; $68,536,872 d. Puts; $68,458,176 e. Puts, $67,413,600 3. Refer to above question. If the MNC decides to do a MMH, how much would its cash inflow be worth in three months? a. $66,346.666.69 b. $67,209,173.36 c. $67,508,554.48 d. $67,341,866.69