Please answer both parts of the question and also explain what is to be done with the futures price of $1.2030 in part (a) if there is any profit/premium to be accounted for and why. Also,in part (b), what is to be done with the 2.75 US cents and if there is any profit/premium to be accounted for and why. Please do not copy from other answers. Thanks! I will give positive review.

Question 1 - Finanu importants (a) A French company expects to pay Us $1200 000 to a us supplier in late November. It is now late July, and the current spot exchange rate is 1 = $1,2200. september and Decemberdollar-luto currency Futuves are being traded at $1,2165 and $102170 respectively. The company wants to hedge its exposure against with currency futures. The Euro futures are available forastandard quantity of 125000 and the ticksize is 0.0001. ci) Explain how the French company might establish a hedge against exchange rate riski cii) suppose that in November when the dollars are paid, the spot rate has moved to 1.2040 and the futures price is 1:2030. show the outcome of the hedge and calculate the effective exchange rate while commenting on the basis risk, if any. (b) A company in cermany Ghan. 'expects pay supplier in us. It is now December and the payment is due in March. The current spotrate is 1:2100. The company use currency options to hedge the exposure: March currency put options are available and are for 125000 euros, have a strike price of $1:2200 and the ticksize is $0.0001. The cost of the option contract is 2.75 US cents pereuro. Assuming there is no bass, (i) Devise a hedging strategy for the German company using Currency options. (ii) Advise on the action to be taken by the company and the outcome in case the spotrate in March when the dollars must be paid is a $1.1800 = 1 and $1.2500=1. US $10 000 000 to a wants to