(A) A French aircraft manufacturer, BAM Ltd., sold an aircraft to American Airlines, a U.S. company, and billed $30 million payable in six months. BAM is concerned with the euro proceeds from international sales and would like to control exchange risk. The current spot exchange rate is $1.05/ and six-month forward exchange rate is $1.10/ at the moment. BAM can buy a six-month put option on U.S. dollars with a strike price of 0.95/$ for a premium of 0.02 per U.S. dollar. Currently, six-month interest rate is 2.5% in the euro zone and 3.0% in the U.S. Required: (i) ) Compute the guaranteed euro proceeds from the American sale if BAM decides to hedge using a forward contract. (ii) If BAM decides to hedge using money market instruments, what action does BAM need to take? What would be the guaranteed euro proceeds from the American sale in this case? If BAM decides to hedge using put options on U.S. dollars, what would be the 'expected' euro proceeds from the American sale? Assume that BAM regards the current forward exchange rate as an unbiased predictor of the future spot exchange rate. (iv) At what future spot exchange rate do you think BAM will be indifferent between the option and money market hedge