Amazon is completing construction on a new mega-warehouse outside of London, England. The final construction payment is due in three months in the amount of 525,000. The current spot rate is 1.6500 $/, and the bid-ask quotes for the three month forward rate are 1.6600-1.6800 $/. If Amazon hedges in the forward market, what will be its dollar cost for the construction payment three months from now? Be specific about how they would hedge? ("Buy (Sell) dollars (pounds) forward")? Amazon may also choose to hedge using an option. The rates available on options to buy and sell pounds are as follows: Type of Option Strike Price Premium Cost Three month call on $ 1.65/$0.040/Three month put on $ 1,65/$0.030/Which option should Amazon consider? Why? Suppose Amazon chose to buy the option. Three months have passed and the spot exchange rate is now 1 58$/. What is the hedged dollar value of the payment? What is the hedged dollar value of the payment if the exchange rate is now 1.68$/? Suppose you are given prevailing interest rates in the US and UK, how would you structure a money market hedge (i.e. resorting to borrowing/lending)