A firm has sold a product in Switzerland with a payment of SFr 4,000,000 to

be received in three months. The following market quotes are available:

firm-specific investing iUS: 6.00% per year

firm specific borrowing iS: 8.00% per year

spot exchange rate: .6250 $/SFr

3-month forward exchange rate: .6203 $/SFr

a put option, with a strike price of .6289 $/SFr, and a premium of 1.2 cents

per unit, i.e. $0.012 per SFr

Calculate the monetary amounts of no hedging; a forward hedge; a money market

hedge; and an options hedge under the following four scenarios. Construct the

typical graph as developed in the Dayton example. Ignore the opportunity cost