5. (50) Today's date: December 1, 2020 You work at the Treasury department of GF and oversee GE's FX risk management Suppose GE has an account receivable of 7,254,300 Australian dollar (AD) due on December 21, 2020, 20 days from now. You are concerned with the potential decline in AD value vs. $ and want to hedge the position. The research department has provided following data to assist you with your hedging decision. to Currency Options avulable from the Philadelphia Stock Exchange Type Exercise price Premium Maturity date Call US$0.7800 US$0.015 per AD 12/21/2020 Put US$0.7720 US$0.034 per AD 12/21/2020 Annual money market interest rates Rates U.S. Australia Borrowing 5.82% 5,20% Deposit 1.90% 1.64% In addition, the following are the actual and expected spot and futures prices for December 1, 2020 and December 21, 2020. Prices Actual rates on 12/1/2020 Assume acrual rates on 12/21/2020 Spot exchange rate USS0.7528 US$0.7682 January 2021 futures price (settlement price) USS0.7598 US$0.7726 On December 1, 2020, GE and PNC entered into a 20-day forward contract (the forward contract matures on December 21, 2020). The agreed forward rate is US$0.7615 per AD. Additional information: One futures contract on AD is for AD100,000 One options contract on AD is for AD10,000 Given above information, answer the following five questions. 1) Determine whether a a) 100% forward hedge: b) 100% money market hedge; c) 100% options hedge, d) 100% futures contract hedge; e) 65% with forward and 35% with currency option, or f) No hedging would be the most appropriate (that is, will result in the largest $ cash intlow) Show all your calculations