Question A. AND B.

Use the Following information (for question A and B) to calculate the dollar cost of using a

1. Forward Market
2. Money Market
3. Option Market
4. Futures Market

To hedge 400,000 Euros of payables due in 1 year.

400,000		US	France
	Borrowing rate	9%	6%
	Deposit Rate	7%	5%
		Bid	Ask
	Spot	1.14$	1.16$
	Forward	1.16$	1.18$
		Call	Put
	Strike	1.20$	1.20$
	Premium	0.100$	0.110$
		Bid	Ask
	Futures	1.18$	1.19$
		Bid	Ask
	Expected spot 1 year	1.28$	1.29$

Question A.

Please specify what need to be done TODAY in each hedging strategy

1. Forward Market
2. Money Market
3. Option Market
4. Futures Market

Question B

Please specify what need to be done one year from now in each hedging strategy.

	Bid	Ask
Expected Spot 1 year	1.28$	1.29$

1. Left the position open
2. Forward Market
3. Money Market
4. Option Market
5. Futures market