Chronos Timo PiecesChronos Timo Places of Boston exports Watches to many countries, selling in local currencies to stores and distributors. Chronos prides itself om being financially conservative. At least 70% of each individual transaction exposure is hedged, mostly in the forward market, but occasionally with options. Chronos foreign exchange policy is such that the 70% hedge may be increased up to a 120% hedge if devaluation or depreciation appears imminent. Chronos has just shipped to its major North American distributor. It has issued a 90-day Invoice to its buyer for 1,530,000. The current spot rate is $1.2215/6, the 90-day forward rate is $1.2282/. Chronos treasurer, Manny Hernandez, has a very good track record in predicting exchange rate movements. He currently believes the euro will weaken against the dollar in the coming 90 to 120 days, possibly to around $1,1681/8 a. Evaluate the hedging alternatives for Chronos Ir Manny is right (Case 1: $1,1681/6) and if Manny is wrong (Cate 2:51.2526/). What do you recommand? b. What does it mean to hedge 120% of a transactione exposure? c. What would be considered the most conservative transaction exposure management policy by a firm? How does Chronos compare? a. Case 1: Manny is right and the spot rate in 90 days is $1,16817 How much in U.S. dollars will Chronos receive in 90 days if 100% of the transaction exposure is hedged with the forward contract? (Round to the nearest dollar)