Clacher plc a UK based company has exported goods to the United States invoiced in US dollars to the value of $1,507,000 (US dollars) on three month's credit. The spot rate is $1.507/E. The three month forward rate is $1.450/ E. Because of volatility in the foreign exchange markets Clacher's finance director is worried that a fall in the US dollar could wipe out their profit on the deal. Two hedging strategies have been suggested: i. A forward market hedge ii. A money market hedge To borrow in Dollars will for three months will cost 6% per annum, whereas to borrow in sterling for one will cost 7.2% per annum. US deposit rate are 5% per annum while deposit rates in the UK are 6.5% per annum. Required: a) Show how a forward market hedge and a money market hedge would operate assuming the following rates apply in three months time: i. $1.52 vs 1 ii. $1.43 vs 1