Please use the following information to answer:

• You have account paybles: 5 m in one year.
• Interest_US: 6.10% per annum & Interest_UK: 9% per annum
• Spot exchange rate: $1.50/ & Forward exchange rate: $1.46/ (1-year maturity)
• Call option strike price: $1.46/ & Put option premium: $0.02/

1. 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. (1 pt)

2. Draw a graph for the put option hedge. (X axis is the spot rate in the future. Y axis is $ cash paid.) (0.5 pts)