. SMU Corporation has future receivables on NZ$4,000,000 in one year. It must decide whether to use options or a money market hedge to hedge this position. Determine which hedge is most appropriate and compare it to an unhedged strategy. (16 pts)

Spot rate of NZ$ $0.54

One-year call option Exercise price =$0.50 premium = $0.07

One-year put option Exercise price = $0.52 premium = $0.03

One-year Forward rate $0.51

US New Zealand

One-year interest rates 9% 6%