Question 4 (4 points) Swiss International Airlines (SwissAir) just ordered the newly launched double-deck, wide body Airbus A380, which is the largest passenger airliner in the world. The invoice price is 200 million payable in six months. Swiss Air is concerned with the euro payable and would like to control the exchange rate risk. The current spot exchange rate is CHF 0.70/ (Note: CHF Swiss Franc) and six-month forward exchange rate is CHF 0.75/ at the moment. SwissAir can buy a six-month call option on euros with a strike price of CHF 0.72/ for a premium of CHF 0.02 per . Currently, the six-month interest rate is 2% in the euro zone and 1.5% in Switzerland. a. In the above case, what type of exchange exposure does SwissAir face? b. If SwissAir decides to hedge using a forward contract, what is the Swiss franc cost of the aircraft? c. If SwissAir decides to hedge using money market instruments, what action does SwissAir need to take? What is the Swiss franc cost of the aircraft? d. If SwissAir decides to hedge using call options on euros, compute the net payable for this purchase if the future spot exchange rate is CHF 0.66/ at maturity. e. Should SwissAir decide to hedge using a forward contract, money market instruments or call options