An Australian firm holds an asset in France and faces the following scenario regarding its value next period:

	State 1	State 2	State 3
Probability	40%	20%	40%
Spot Rate	A$ 2.1000	A$ 1.8000	A$ 1.1000
P*	2,543.33	2, 967.22	4,855.45

P^* = price of the asset held by the Australian firm The CFO decides to hedge his exposure by selling forward the expected value of the euro. denominated cash flow at F₁(A$/) = A$1.64/. As a result,

Group of answer choices

none of the other answers.

the firm now has a perfect hedge.

the firm now has a nearly perfect. hedge.

the firm's exposure to the exchange rate is made worse by hedging.