5. Union Corp must make a single payment of ES million in six months at the maturity of a payable to a French firm. The finance manager expects the spot price of the to remain stable at the current rate of $1,60). But as a precaution, the manager is concerned that the rate could rise as high as $1.70e or fall as low as $1.50e. Because of this uncertainty, the manager recommends that Union Corp bedge the payment using either options of futures. Six months Call and Put options with an exercise price of $1.60E are available. The Call sells for s.08ie and the Put sells for s.04e. A six-month futures contract on is trading at $1.60. - Should the manager be worried about the dollar depreciating or appreciating? - IfUnion Corp decides to hedge using options, should it buy Calls or Puts to bedpe the payment? Why? - If futures are used to hedge, should the company bay or sell e futures? Why? - What will be the net payment on the payable if an option contact was used? Asume the following three scenarios the spot price is six months will be $1.50%,51.60E, or 51.706 . - What will be the net payment if futures had been used to hodge using the ume icenarios as above. - Which method of hadging is preferable