3) An importer of Swiss watches has an account payable of CHF750,000 due in 90 days. The following data is available: Rates and prices in US-cents/CHF. Spot rate: 71.42 cents/CHF 90-day forward rate: 71.14 cents/CHF US-dollar 90-day interest rate: 3.75% per year Swiss franc 90-day interest rate: 5.33% per year Option Data in $ cents/CHF Strike 70 72 Call 2.55 Put 1.42 2.40 1.55 a) Assess the USD cost to the importer in 90 days if it uses a call option to hedge its CHF750,000 account payable. Use the call with a strike price of 72 cents/CHF. Be sure to include the call premium in calculating the cost of the account payable. b) What will be the cost of the payable in 90 days if a forward contract is used? c) By how much must the CHF weaken relative to the USD, from the current spot rate of 71.42 cents/CHF before the call option provides a lower cost than the forward hedge? 3) An importer of Swiss watches has an account payable of CHF750,000 due in 90 days. The following data is available: Rates and prices in US-cents/CHF. Spot rate: 71.42 cents/CHF 90-day forward rate: 71.14 cents/CHF US-dollar 90-day interest rate: 3.75% per year Swiss franc 90-day interest rate: 5.33% per year Option Data in $ cents/CHF Strike 70 72 Call 2.55 Put 1.42 2.40 1.55 a) Assess the USD cost to the importer in 90 days if it uses a call option to hedge its CHF750,000 account payable. Use the call with a strike price of 72 cents/CHF. Be sure to include the call premium in calculating the cost of the account payable. b) What will be the cost of the payable in 90 days if a forward contract is used? c) By how much must the CHF weaken relative to the USD, from the current spot rate of 71.42 cents/CHF before the call option provides a lower cost than the forward hedge