suppose you are working for a British firm, and your firm is expecting a payment of C$$3$ million from its business partners in $270$ days. Worrying about the exchange rate risk, your boss asks you for recommendation on hedging the exchange rate risk. You call the bank and get the following information:

$270-$day forward $/$C$ market: F$270/$C$ $=0\mathrm{.}5025$

$270-$day option $/$C$ market: Strike price $==$ S$270/$C$ $=0\mathrm{.}5025$

Option premium $=0\mathrm{.}0010$ per C$

Note: Keep you answer to $4$ decimal points.

a$)$ What recommendation would you give if your boss wants to use a forward contract on C$ to hedge exchange rate risk $($i$.$e$.,$ should he take a long or short position$)?$ Explain. $(3$ points$)$

b$)$ What kind of option contract on C$ should your boss use to hedge exchange rate risk? Explain. $(3$ points$)$

c$)$ If the spot $/$C$ exchange rate in $270$ days were $0\mathrm{.}5038,$ which contract, forward or option, should be used as a hedging device? Find the total amount of $$ received by the firm. explain. $(7$ points$)$

d$)$ Redo part $($c$)$ if the spot $/$C$ exchange rate in $270$ days were $0\mathrm{.}5019.(7$ points$)$