One final Scenario. suppose LMN is unsure whether they will owe or receive ZAR 30 million in one year. Thus they construct a long Currency Straddle covering ZAR 30 million. If the probability distribution shown at the top of page 4 (picture shown) is correct firm , will the hedge be succesful? (Note: a "successful hedge " is a hedge where the firm's resulting position is better than an unhedged position.)* ignore scribbles if needed*

LMN, Inc. does business in South Africa and is considering various possibilities to hedge transaction exposure. Relevant information follows: Current Spot Rate of South African Rand (ZAR): USD.076/ZAR 1 Year Forward Rate: USD .08 1/ZAR 1 Year US Interest Rate: 2.5% 1 Year South African Interest Rate: 4.0% .Puf Options: Strike Pfite . Predicted I Year Spot Rate Probability Distribution USD A77/RAR:Premium AR ions: Strike Prite U Call Options ke Pri USD .076/ZAR 33% USD.079/ZAR 34% USD 082/ZAR 33%