5. You plan to visit Geneva, Switzerland in three months to attend an international business conference. You expect to incur the total cost of CHF 7,000 for lodging, meals and transportation during your stay. As of today, the spot exchange rate is $0.6300/CHF and the three-month forward rate is $0.6450/CHF. You buy the three-month call option on CHF with the exercise price of $0.6500CHF for the premium of $0.06 per CHF as a hedge. Assume that your expected future spot exchange rate is the same as the forward rate. The three-month interest rate is 6 percent per annum in the United States and 4 percent per annum in Switzerland. (a) Calculate your expected dollar cost of buying CHF 7,000 if you choose to hedge via call option on CHF. (b) Calculate the future dollar cost of meeting this CHF obligation if you decide to hedge using a forward contract. (c) At what future spot exchange rate will you be indifferent between the forward and option market hedges?