Q4 (28%) You operate a Canadian rm and have just secured a contract to sell 1,000,000 worth of merchandise to a customer in France. The fund will be received in 180 days. You would like to hedge against changes in C$/ FX rate. You observe the following market quotes. Note: To obtain the effective ISO-day interest rates, you can simply divide the quoted (per annum) interest rates by two. For example, the effective ISO-day borrowing rate in is 4.55% (= 9.10%l2) S a at and Forward FX Contracts ISOday S u at FX rate Forward FX rate CS US$ 0.9060 - 0.9067/C$ US$ 0.9050 - 0.9063/C$ US$ 1.2489 - l.2496/ US$ 1.2355 - 1.2370/E 180-da Interest Rates in C $ and Lending (Investment) Rate Borrowing Rate (% annum) (% annum) Hint: In answering this question, you might nd it easier to rst calculate the cross rates between C3 and . (a) Based on the above quotations, is there any arbitrage prot opportunity from violating IRP? Show your calculations and explain the results. (b) What is the hedged C$ receivable in 180 days using a forward market hedge? Give your answer to the nearest C33. (0) Outline the borrowing, lending and spot FX exchange strategies in order to accomplish a money market hedge. What is the hedged C53 receivable in 180 days using the money market hedge? Give your answer to the nearest C$