4) XYZ Corporation, located in the United States, has an accounts payable obligation of 750 million payable in one year to a bank in Tokyo. The current spot rate is 116/$1.00 and the one year forward rate is 109/$1.00. The annual interest rate is 3 percent in Japan and 6 percent in the United States. XYZ can also buy a one-year call option on yen at the strike price of $0.0086 per yen for a premium of 0.012 $ cent per yen. The future dollar cost of meeting this obligation using the forward hedge is D) $6,545,400. A) $6,653,833. (B) $6,880,734. C) $ 6,450,000. Japanese exporter has a 1,000,000 receivable due in one year. Detail a strategy using 9) a money market hedge that will eliminate any exchange rate risk. 1-year rates of interest Borrowing Lending Dollar 4.5 % Euro 6.00 % Yen 1.00 % Spot exchange rates 1-year Forward Rates $ 1.25 = 1.00 = $ 1.2262 1.00 $ 1.03 = 100 $ 1.00 = 100 A) Borrow 943,396.22 today. Convert the euro to dollars at the spot exchange rate, convert these dollars to yen at the spot rate, receive 117,924,528.30. B) Borrow 970,873.79 today. Convert the euro to dollars at the spot exchange rate, receive $1,165,048.54. Convert these dollars to yen at the spot rate, receive . C) Lend 943,396.22 today. Convert the euro to dollars at the spot exchange rate, convert these dollars to yen at the spot rate. D) Convert 117,924,528.30 to dollars at the spot rate; convert dollars to euro at the spot rate; lend 943,396.22 at 5.25 percent. 4.00% 5.25 % 0.75 %