Need Stratgic Points Explaination with Answer . Be sure about answer

72. Hedging Techniques RTP Expo is an importer/ Exporter of Textile Machinery. It is based in the UK but trades extensively with countries throughout Europe. It has a small Subsidiary based in Germany. The Company is about to invoice a Customer in Germany DM 7,50,000 payable in three months' time. Expo's Treasurer is considering two methods of hedging the exchange risk - Method 1: Borrow DM 7,50,000 for 3 months, converts the Loan into Sterling and repay the Loan out of eventual receipts. Method 2: Enter into a three-month Forward Exchange Contract with the Company's Bank to sell DM 750,000 . The Spot Rate of Exchange is DM 2.3834 to the 1. The three month Forward Rate of Exchange is DM 2.3688 to the 1. Annual Interest Rates for three month's borrowing are: Germany 3%; UK 6%. Assume that Expo is trading in and with developing countries other than Europe and has a Subsidiary in a country with no developed Capital or Currency Markets. Expo is now about to invoice a customer in that country in the local currency. Advise Expo's Treasurer about the ways in which the risk can be managed in these circumstances