Consider a US company expecting to receive 200,000 euros (EUR) in 90 days from its French customer. The current spot price is $1.15, while the forward price is quoted at $1.17. The firms CFO has developed a probability distribution of the future spot prices of EUR as follows:

Scenarios for EUR spot in 90 days	Probability
$1.10	10%
$1.14	20%
$1.18	40%
$1.22	30%

a) or each spot price scenario, calculate differences, in US dollars, in the notional amount of the firms receivables between the hedging and no hedging cases.

Answer (complete the table below):

Scenarios for EUR spot in 90 days	Probability	Unhedged notional amount ($)	Difference in notional amount
$1.10
$1.14
$1.18
$1.22

b) Calculate the expected net gain/loss of hedging with the forward contract, compared to not hedging at all. Determine whether the firm should hedge its exposure or not.