Makoto Satou manages the Tanaka Global Fund, a Japan-based investment fund,which has USD900 million invested in the U.S. and EUR 700 million invested in Europe.Tanaka Global Funds home currency is the Japanese yen (JPY). On 1 July 2008,Satou decides to fully hedge the funds currency risk for the next two months. Data arepresented in Exhibit 1.Exhibit 1Foreign Exchange Rates1 July 2015Spot rate (JPY/USD) 115.90Spot rate (JPY/EUR) 155.75September dollar futures contract (size = USD 100,000) (JPY/USD) 115.70September Euro futures contract (size = EUR 100,000) (JPY/EUR) 156.70i) State the futures positions the Tanaka Global Fund should take on 1 July 2008, tohedge the funds currency risk. Calculate the number of contracts needed to hedge.Show your calculations.On 1 September 2008, Tanaka Global Funds U.S. portfolio has increased to USD 945million; its European portfolio has increased to EUR 735 million. Current foreignexchange data are presented in Exhibit 2.Exhibit 2Foreign Exchange Rates1 September 2015Spot rate (JPY/USD) 110.90Spot rate (JPY/EUR) 144.75September dollar futures contract (size = USD 100,000) (JPY/USD) 110.77September euro futures contract (size = EUR 100,000) (JPY/EUR) 144.80ii) Evaluate the effectiveness of the Tanaka Global Funds hedge by comparing thefully hedged portfolio return with the unhedged portfolio return. Show yourcalculations.iii) Explain why the portfolio is not fully hedge from currency risk?iv) When is most suitable to use a forward contract instead of a futures contract?