6. Your firm, ABC Berhad, has a payable account amount of SGD 1,000,000 in 3 months. Your company is considering hedging the cash flows. Your firm analysts prepare the following information. Spot rate : MYR3.0950/SGD; MYR3.0960/SGD 90-day forward rate : 100;200 90-day interest rate in Malaysia : 8%; 9% per annum 90-day interest rate in Singapore : 3%; 4% per annum 90-day options Exercise price: MYR3.0952 (Call premium: MYRO.0350/SGD; Put premium: MYRO,0450/SGD) Table 1: Forecasted future spot exchange rate in 90 days Scenario Forecasted future spot exchange First MYR3.0950/SGD Second MYR3.0952/SGD Third MYR3.1000/SGD a. If your firm decides to hedge the foreign exchange risk exposure, state the strategy you will use for the following alternative strategies: a forward hedge (1 mark) ii. an option hedge (1 mark) b. Calculate the expected net value in Malaysian Ringgit (MYR) of your firm cash flow in 3 months for each of the possible future spot rates as in Table 1 for each alternative strategy in (a). (7.5 marks) c. Based on your answer in (b), state the hedging strategy your company will choose for each of the possible spot exchange rate scenarios as in Table 1. (1.5 marks) d. Your deputy, Ms. Chandring, suggests that by implementing a money market hedging strategy, the firm can be better position for each of the possible spot exchange rate situations shown in Table 1. Is Ms. Chandring's recommendation correct? Support your answer with calculations