A Swie importer of bicycles has placed in order with an Italian fin for 1,000,000 worth of hiccles. The payment is due in 12 month. The interest rate is 4% per annum in Switzerland and 2% per annum in Italy. The current spot rate is SF1.6957, and one-yeu forward rate is SF1.7. BTU -Pont- (1) Propose two hedging strategies for the Swiss Importer. Specify action/transactions to take. Which hedging strategy would you recommend? Explain with calculations, (2) Other things being equal, at what forward rate would the Swiss importer be indifferent between the two hedging strategies you propose? (3) Suppose the Swiss importer has the choice of paying 1,000,000 or SF1,750,000. At what future spot rate will the Swiss importer choose to pay with EUR? If the spot rate turns out to be SF176/ in twelve months, what is the payment made by the Swiss imporWhat is the best deal with its foreign currency exposure? aft Ru