a$)$ G$-$company USA company sales electrical equipment to S$-$Company a UK company for $500,000.$ Payment is due on $3$ months late on June. The following quotes are available.

Spot exchange rate USD $\frac{1\mathrm{.}7640}{?}$

$3$ month forward rate USD $1\mathrm{.}7540/$

Required:

Show how hedging in forward exchange market can be used to minimize G$.$ company transaction exposure.

b$)$ Define the following terms.

i$)$ spot rate

ii$)$ Forward rate.