1. Forward versus Money Market Hedge on Receivables. Assume the following information:

180day U.S. interest rate = 1.5% per 180 days or 3% per year compounded semi-annually

180day British interest rate = 1% per 180 days or 2% per year compounded semi-annually

180day forward rate of British pound = $1.32

Spot rate of British pound = $1.33

Assume that Riverside Corp. from the United States will receive 200,000 pounds in 180 days. Would it be better off using a forward hedge or a money market hedge? Substantiate your answer with estimated revenue for each type of hedge.