3. (Ch. 5) Speculating with Currency Put Options, Queen Co. has purchased AUD options for speculative purposes. Each option was purchased for a premium of USD .02 per unit, with an exercise price of USD 79 per unit: (the exchange nate we use is AUDUSD.) Queen Co. will purchase the AUD just before it exercises the options (if it is feasible to exercise the options). It plans to wait until the expiration date before deciding whether to exercise the options. In the following table, fill in the net profit (or loss) per unit to Queen Co. based on the listed possible spot rates of the AUD on the expiration date. (each row: 3 points with a total of 18 points) 4. (Ch. 5) Hedging With Put Options. As treasurer of Killam Corp. (a U.S. exporter to Australia), you must decide how to hedge (if at all) future receivables of AUD 2,000,000 (AUD: Australian dollar) after 90 days from now. Put options are available for a premium of USD .02 per unit and an exercise price of 76 AUDUSD. The forecasted AUDUSD spot rate in 90 days follows: Given that you hedge your position with the put options (to buy or to sell?) ( 5 points), create a probability distribution for USD to be received in 90 days. Assume that there are no opportunity costs for hedging by the options. What is the minimum cash flow in the USD considering both the underlying and hedging positions? (25 points) 3. (Ch. 5) Speculating with Currency Put Options, Queen Co. has purchased AUD options for speculative purposes. Each option was purchased for a premium of USD .02 per unit, with an exercise price of USD 79 per unit: (the exchange nate we use is AUDUSD.) Queen Co. will purchase the AUD just before it exercises the options (if it is feasible to exercise the options). It plans to wait until the expiration date before deciding whether to exercise the options. In the following table, fill in the net profit (or loss) per unit to Queen Co. based on the listed possible spot rates of the AUD on the expiration date. (each row: 3 points with a total of 18 points) 4. (Ch. 5) Hedging With Put Options. As treasurer of Killam Corp. (a U.S. exporter to Australia), you must decide how to hedge (if at all) future receivables of AUD 2,000,000 (AUD: Australian dollar) after 90 days from now. Put options are available for a premium of USD .02 per unit and an exercise price of 76 AUDUSD. The forecasted AUDUSD spot rate in 90 days follows: Given that you hedge your position with the put options (to buy or to sell?) ( 5 points), create a probability distribution for USD to be received in 90 days. Assume that there are no opportunity costs for hedging by the options. What is the minimum cash flow in the USD considering both the underlying and hedging positions? (25 points)