Question 2 (26 marks) Qantas is trying to decide how to go about hedging CHF 100 million in ticket receivables in 180 days. The following data is available on interest rates and exchange rates: Spot rate AUD/CHF Bid: 0.6648; Ask: 0.6653 Forward rate AUD/CHF (180 days) Bid: 0.6614; Ask 0.6619 Swiss 180-day interest rate (annualised): -0.75% Australian dollar 180-day interest rate (annualised): 0.25% Note: The notation AUD/CHF indicates that AUD is the base currency and CHF is the quote currency. The quotes indicate how much of the quote currency is needed for you to get one unit of the base currency a) What is the hedged value of Qantas's ticket sales receivable using a forward market hedge? (4 marks) b) What is the hedged value of Qantas's ticket sales receivable using a money market hedge? (6 marks) c) Which hedge is preferable? Why? (4 marks) d) Is there an arbitrage opportunity here? (6 marks) e) Suppose the expected AUD/CHF spot rate in 180 days is 0.7000, with a range of 0.6750 to 0.7250. Should Qantas hedge? What factors should Qantas consider? (6 marks)