3- Currency Derivatives (10 points) Assume Saputo Inc must pay an Australian supplier AUD$250,000 for payables in 90 days. The current spot rate is $0.92 but it expects the Australian dollar to appreciate. As such, it has decided to hedge and is considering two options: Option 1: Forward Contract- AUD$250,000 at $0.94 per unit Option 2: Options Contract- AUD$250,000 with strike price of $0.93 + $0.02 premium per unit a. For option #2, what kind of option should Saputo consider; put or call, why? (1 point) b. If Saputo is correct and the Australian dollar appreciates to $1.00, what would have been the better option and why? How much will they have saved/lost by hedging with this option? Show your work. (4 points) c. If Saputo is incorrect and the Australian dollar depreciates to $0.85, what would have been the better option and why? How much will they have saved/lost by hedging with this option? Show your work. (3 points) d. If Saputo is correct and the Australian dollar appreciates to $1.00, but their supplier goes bankrupt, and the order is never filled (therefore Saputo does not have to pay anything), what would have been the better option and why? How much will they have saved/lost by hedging with this option? Show your work. (2 points)