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PLEASE I NEED HELP IMMEDIATELY I HAVE VERY VERY FEW TIME PLEASE!!! The American Company Us Star bought goods from the european company Carrefour. The

PLEASE I NEED HELP IMMEDIATELY I HAVE VERY VERY FEW TIME PLEASE!!!

The American Company Us Star bought goods from the european company Carrefour. The contract states that Us star has to pay 10 milion to Carrefour in 180 days upon delivery of the goods. Because this is a sizable contract for the firm and because the contract is in the Euros rather than Us dollars, several hedging alternatives are considered to reduce the exchange rate risk arising from the sale. To help the American firm Us star make a decision, you have gathered the following currency and market quotes: Current spot rate. $1.3872/

Currency adviser's forecast spot rate in 180 days. $1.3850/

180 day forward rate. $1.3886/

Us Star's Wacc($) (annual rate) 7.600%

180 day dollar deposit rate 2.000%

180 day euro deposit rate. 1.600%

180 days dollar borrowing rate. 2.500%

180 day euro borrowing rate. 2.100%

Note that all 180 days rates above are not annualized but are the corresponding rates that you would get for 180 days

A 180 day at the money put option on the is available for a premium of 1.5%

A 180 day at the money call option on the is available for a premium of 1.5%

1)What are the risks if the Us company remains unhedged? 2)How would you implement a forward hedge? What advantages would a forward hedge provide? 3)How would you implement a money market hedge? What advantages would a money market hedge provide? 4)Which hedge do you recommend between the forward hedge and the money market hedge.Why? 5)What is the strike of the at the money put option? What is the strike of the at the money call option? I'm

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