A UK MNC is expecting to make a 1,000,000,000 Yen payment in 6 months (So the UK MNC has a payable due).

Currently the exchange rate is 140=1. 6-Month Puts and Calls on the Yen are selling at .00045/ on a contract size of 12,500,000 Yen with a Strike price of 140=1

A) Should the UK MNC buy calls or puts?

B) How many contracts?

C) Determine the UK MNCs net (include all relevant costs) payment in UK if:

1. ) The final exchange is 160=$1
2. ) The final exchange is 120=$1