- A U.S. company exported a product to a British company and will be receiving 20 million for the sale in one year. The current spot rate is $1.5000/. The annual interest rate is 1 percent in the United States and 4 percent in the U.K. The company can buy a one-year put option on the British pound at the exercise price of $1.5000/ for $0.0075/.

3. Calculate the net future value dollar proceeds for the U.S. company using the option hedge if the spot exchange rate turns out to be $1.5500/ one year from now.

4. Calculate the future value dollar proceeds for the U.S. company using the money market hedge.