Please use the following information to answer questions #1- 7:

Account receivables: 5 million in one year.

Interest in US: 6.10% per annum

Interest in UK: 9% per annum

Spot exchange rate: $1.50/

Forward exchange rate: $1.46/ (1-year maturity)

Put option strike price: $1.46/

Put option premium: $0.02/

Questions:

1. How much will you receive in $ if you use the forward contract hedge? You must show all work to earn credit.
2. Draw a graph for the forward contract hedge. (X axis is the spot rate in the future. Y axis is $ cash received.)
3. How much will you receive in $ if you use the money market hedge? You must show all work to earn credit. No credit will be given without supporting work.
4. Draw a graph for the money market hedge. (X axis is the spot rate in the future. Y axis is $ cash received.)
5. How much will you receive in $ if you use the put option hedge? You must show all work to earn credit. No credit will be given without supporting work.
6. Draw a graph for the put option hedge. (X axis is the spot rate in the future. Y axis is $ cash received.)
7. Find out point 1 and point 2. You must show all work to earn credit. No credit will be given without supporting work.