Assume the following information:

U.S. deposit rate for 1 year = 11%

U.S. borrowing rate for 1 year = 12%

Swiss deposit rate for 1 year = 8%

Swiss borrowing rate for 1 year = 10%

Swiss forward rate for 1 year = $0.40

Swiss franc spot rate = $0.39

Also assume that a U.S. exporter denominates its Swiss exports in Swiss francs and expects to receive SF800,000 in 1 year.

a. Using the information above, what will be the approximate value of these exports in 1 year in U.S. dollars given that the firm executes a forward hedge?

b. Using the information above, what will be the value of these exports in 1 year in U.S. dollars given that the firm executes a money market hedge?

c. Which hedge will be best for the firm?