QUESTION 3 You wish to hedge your euro receivable. Which of the following strategies would hedge your exposure/reduce your risk? Select all the ones that apply. Ans: Buy euro futures. Sell euro futures. Buy calls on the euro. Sell calls on the euro. Buy puts on the euro. Sell puts on the euro. A money market hedge where you borrow euros, exchange to $, invest in $. A money market hedge where you borrow $, exchange to euros, invest in euros.

QUESTION 4 You have bought 6-month put options on the Mexican Peso with a strike price of 0.0490 $/peso at a price of 0.014 cents per peso for 30,000,000 pesos (careful of the decimal points!). Your cost of capital is an annual 9% rate. If the value of the peso declines to 0.0471