Instructions: This section consists of two (2) questions with marks as indicated. Answer both questions in the answer booklet provided, showing all workings. (Suggested time: 50 minutes) Question 44 (25 marks) Assume that Baton Rouge, Inc. will need $1 million in one year. The existing spot rate of the Singapore dollar is $.60. The one year forward rate of the Singapore dollar is $.62. The expected probability distribution for the future spot rate in one year as follows: Assume that one year put options on Singapore dollars are available, with an exercise price of $.63 and a premium of $.04 per unit. One year call options on Singapore dollars are available with an exercise price of $.60 and a premium of $.03 per unit. Assume the following money market rates: Given this information and showing and explaining all workings, determine whether a money market hedge, a currency options hedge or an unhedged strategy would be most appropriate for Baton Rouge to hedge its payables position