21. a. Assume that Chicken Inc. expects to receive S$1,000,000 in one year. The existing spot rate of the Singapore dollar is $.60. The one-year forward rate of the Singapore dollar is $.62. Chicken Inc, created a probability distribution for the future spot rate in one year as follows: Future Spot Rate Probability $.61 25% .64 50 .67 25 Assume that one-year put options on Singapore dollars are available, with an exercise price of $.64 and a premium of $.04 per unit. One-year call options on Singapore dollars are available with an exercise price of $.60 and a premium of $.02 per unit. Assume the following money market rates: Deposit rate Borrowing rate U.S. 4% 7% Singapore 5% 6% Given this information, determine whether a forward hedge, money market hedge, or a currency options hedge would be most appropriate. Then compare the most appropriate hedge to an unhedged strategy, and decide whether Chicken Inc. should hedge its receivables position. D. Assume that Luna Tech Inc. expects to need S$500,000 in one year. Using any relevant information in part (a) of options hedge would be most appropriate . Then, compare the most appropriate hedge to an unbeded strategy, and decide whether Luna Tech Inc. should hedge its payables position. (ASSUME the company does not have idle money sitting around. This means if they do the money market hedge, they need to borrow the money.) C. Assume that one year has passed and the realized spot rate is $.61. Determine the real cost of hedging for both companies above