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Hi can you please help me with this question? Bridgestone, a Japanese-based company, receives recurring income in USD of about USD 5 billion per year.

Hi can you please help me with this question?

Bridgestone, a Japanese-based company, receives recurring income in USD of about

USD 5 billion per year. The current exchange rate is 120/USD. The interest rates in

Yen and USD are respectively 0.5% and 3.5%, leading to a forward price of

116.52/USD. Bridgestone works in a low-margin industry.

1.Hedge next year's exposure using a simple forward contract. Be clear on ALL the

details.

Make a graph of unhedged windfall, the forward's payoff, and the hedged

windfall

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