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3. (Ch. 11) Comparison of Techniques for Hedging Payables. Kiwi Corp. has future payables of NZD 3,000,000 (NZD: New Zealand dollar) in one year. It must decide whether to use options or a money market hedge to hedge this position. (3 points) Use any of the following information to make the decision. Verify your answer by determining the estimate (or probability distribution) of dollar revenue to be received in one year for each type of hedge: Option hedge (15 points) and Money market hedge (12 points) S: (NZDUSD) = .71 One-year call option: Exercise price = .69 NZDUSD; premium = USD 03 One-year put option: Exercise price = 72 NZDUSD; premium = USD.02 One-year deposit rate One-year borrowing rate U.S. New Zealand 1% 3% 2% 4% Rate .75 Probability 20% Forecasted S (NZDUSD) .72 50% +68 30%