QUESTION Use the following information to answer the next four questions: The Atlas Corporation, a.s. -based software company, needs to hedge its 90 day exposure to the euro. Atlas sells the software to a French distributor and buys services from a German supplier. All transactions are settled in euro. Atlas estimates the current dollar value of its receipts from its French customer at $42 million and its German payables at $135 million. There is a high degree of uncertainty in the euro exchange rate against the dollar. The following information is available (e stands for euro) Spot 3-month forward 3-month futures 90-day call option 90-day put option 90-day dollar interest rate 90-day euro interest rate $1.2400/E $1.2000/E $1.2200/E 51.2100/E strike: $1.2100/E strike: 4.80% p.a. (deposit) 7.60% pa. (deposit) $ 0.04/E premium $ 0.02/E premium 8.80% p.a. (loan) 12.00% p.a. (loan) If Atlas wants to hedge with forwards, it should... Sign a forward contract to buy E75 million Sign a forward contract to sell 593 million. Sign forward contracts to buy 542 million and sell $135 million Sign forward contracts to sell 542 million and buy 5135 million. No hedee needed because the euro is the currency for both France and Germany. fick Save and Submit to save and submit. Click Save All Answers to see all answers