our firm is an Italian importer of bicycles. You have placed an order with a Swiss firm for SFr. 2,000,000 worth of bicycles. Payment (in francs) is due in 12 months. Detail a strategy using futures contracts that will hedge your exchange rate risk. Have an estimate of how many contracts of what type and maturity. 12-months Forward British Pound Contracts ()10,000 = ($/)2.0000 12-months Forward Euros Contracts ()10,000 =($/) 1.6000 12-months Forward Swiss Francs Contracts (SFr)10,000 = ($/SFr)=1.0000.

a) Go long 200 12-month Swiss franc futures contracts; and long 125 12-month euro futures contracts.

b)Go short 200 12-month Swiss franc futures contracts; and short 125 12-month euro futures contracts.

c)

Go long 200 12-month Swiss franc futures contracts; and short 125 12-month euro futures contracts.

d) Go short 200 12-month Swiss franc futures contracts; and long 125 12-month euro futures contracts.