The Atlas Corporation, a U.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:

Spot $1.2200/ Bid and $1.2400/ Ask || 3-month forward $1.1820/ Bid and $1.2000/ Ask ||

3-month futures $1.2010/ Bid and $1.2200/ Ask || 90-day call option $1.2100/ strike; $ 0.0400/ premium

90-day put option $1.2100/ strike; $ 0.0200/ premium || 90-day dollar interest rate 4.80% p.a. (deposit) 8.80% p.a. (loan)

90-day euro interest rate 7.60% p.a. (deposit) 12.00% p.a. (loan)

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If Atlas wants to hedge with forwards, it should?

a) Sign a forward contract to buy 75 million

b) Sign a forward contract to buy $93 million

c) Sign forward contracts to buy $42million and sell $135 million

d) Sign forward contracts to sell $42million and buy $135 million

e) No hedge needed. The euro is the currency of both France and Germany

If it wanted to hedge with options it should?

a) Buy puts

b) Buy calls

c) Buy puts and sells calls

d) buy puts and buy calls