5. This question also connects with the FXstreet forecasts and the hedging decision depends on the number of analysts projecting an adverse movement. If ALL analysts think the foreign currency is going up, then you want to hedge the lowest amount possible of the receivables, which is 25% If the forecasts suggest the foreign currency is going down, then you will definitely want to hedge 100% of the exposure. You can vary your amount to hedge based on the number (%) of analysts expecting an adverse movement. Select the hedging level and calculate the profit/loss for each hedging technique. Compare to the unhedged position (no hedge case) and determine what strategy was the best.
Pair movement that hurts us	UP
# analysts expecting such movement	6	Amount to leave unhedged		570,000
# forecasts avaiable	14	Amount to hedge		430,000
Percentage to hedge	43%
		Amount received if left unhedged		$ 1,054,964
	Unhedged revenue	Hedged revenue	Total	P/L
Forward hedge	$ 601,329	$ 409,500	$ 1,010,829	44,135
Future hedge		$ 405,782	$ 1,007,111	47,852
Put options hedge (ITM)		$ 411,280	$ 1,012,609	42,354
Put options hedge (ATM)		$ 405,693	$ 1,007,022	47,941
Put options hedge (OTM)		$ 407,244	$ 1,008,573	46,391
Money market hedge		$ 452,047	$ 1,053,376	1,587	Value created
Which alternative was best in this case? Was your forecast useful?