Answer All Questions 1. The Dole Company (USA) has just purchased a Canadian food distributor for C$6,000,000. Payment is due in six months. Dole's cost of capital is 12%. The following quotes are current in the market. Interest rate for borrowing Interest rate for investing Spot exchange rate Six-month forward exchange rate Six-month call option on C$6,000,000 at an exercise price of C$1.20/$, premium of 1% 6.00% pa. in USA 4.00% p.a. in USA $1.00 $1.00- 10.0% pa. in Canada 8.0% pa. in Canada C$1.20 C$1.22 Six-month put option on C$6,000,000 at an exercise price of C$1.20/$, premium of 2% a. Calculate the alternative ways that Dole can hedge the foreign exchange transaction exposure. b. At what spot rate in six months, option is better than forward hedge