An EXPORTER based in Japan has a 1,000,000 receivable due in one year. Spot and forward exchange rate data is given in the table: ( this assumes that both forward contracts are in USD) The one-year risk free rates are i_$ = 4.03%; i = 6.05%; and i = 1%. Detail a strategy using forward contracts that will hedge exchange rate risk.

		Borrow 970,873.79 today; in one year you owe 1m, which will be financed with the receivable. Convert 970,873.79 to dollars at spot, receive $1,165,048.54. Convert dollars to yen at spot, receive 116,504,854.
		Sell 1m forward using 16 contracts at the forward rate of $1.20 per 1. Buy 150,000,000 forward using 11.52 contracts, at the forward rate of $1.00 = 120.
		Sell 1m forward using 16 contracts at the forward rate of $1.25 per 1. Buy 150,000,000 forward using 12 contracts, at the forward rate of $1.00 = 120.
		None of the above