A U.S. based MNC has just signed a contract with a British company that calls for the U.S. MNC to provide the British company with consulting services over a three-month period that entails payments in British pound. The current dollar value of the contract is $128 million. At the same time the U.S. company signs a three-month contract with another British company to buy supplies for three- month delivery and agrees to settle its bill in British pounds. The dollar value of the British pound contract is $35.744 million. At the same time, the U.S. MNC signs a contract to export $85 million worth of its finished product to Ecuador. Also, for delivery and settlement in three months (Ecuador uses the U.S. dollar as its home currency). The U.S.-based MNC is particularly worried about a high degree of uncertainty in the foreign exchange markets. So, it decides to evaluate its hedging alternatives. The following information is available: I. Specify exactly what your exposure is and list the hedging instruments you should consider. II. Through narrative followed by the necessary calculations, show how each of these hedging alternatives can be achieved (please use my example as a guide and adjust the narrative to fit your solution. Calculations alone, if correct, will only earn half the credit). III. Assume the following probability distribution for the pound spot rate at the end of three months. Analyze the option versus the no-hedge alternatives and decide which alternative is probably the better one of the two and why. (Again, please review my demonstration and adjust terms, phrases, descriptions, and calculations to fit your solutions). IV. Analyze, following the procedure and sequence I used in my example, the hedging alternatives and how they compare to one another pairwise in terms of rewards and risk. Compare and contrast one pair at a time before finally deciding what alternative in your opinion would be best to choose for hedging your transaction exposure