A USA store expects 1,250,000 in repatriated profits from its German subsidiary six months from today. Currently, the spot rate is US $1.0550/, and the six-month forward rate is US $1.0300/. Suppose that in the options market, the six-month put option premium is US $0.0012 per euro and the exercise price is $1.0310. (a) Describe the strategies the US company can undertake to hedge the currency risk with forwards and options. What are pros and cons of each strategy? (b) If in six months the spot rate is US $1.02/, what are the profits and losses on the hedging strategies? What if the spot rate turns out to be US $1.04/? (c) If euro futures are also available, how will the firm hedge the currency risk with futures? What are the differences between futures and forwards?