Given the following information about the Malaysian ringgit (MYR):

The existing spot rate of the MYR is S$0.32.

The one-year forward rate of the MYR is S$0.328.

The probability distribution of the future spot rate in one year is as follows.

Future Spot Rate	Probability
S$0.36	30%
S$0.34	25%
S$0.32	25%
S$0.30	20%

The one-year call option on MYR has an exercise price of S$0.32 and a premium of S$0.04 per unit.

The one-year put option on MYR has an exercise price of S$0.32 and a premium of S$0.03 per unit.

Assume the following one-year money market rates (annualized):

	S$	MYR
Deposit rate	7%	5%
Borrowing rate	8%	6%

Merlion Electronics Pte Ltd, a Singapore based multinational corporation, expects to receive MYR 1 million in one year.

Compare the most appropriate hedge to an unhedged strategy and decide whether Merlion Electronics should hedge its receivables position. (5 marks)