1. The following graph represents the hedging options for an accounts payable in British pounds. Give the correct hedging decision for each of the following risk and expected spot price scenarios:
   1. Risk averse and expected spot at expiration is $1.44
   2. Risk averse and expected spot at expiration is $1.50
   3. Risk averse and expected spot at expiration is $1.57
   4. Risk tolerant and expected spot at expiration is $1.44
   5. Risk tolerant and expected spot at expiration is $1.50
   6. Risk tolerant and expected spot at expiration is $1.57

Accounts Payable in British Pounds Strike = $1.50, call premium = $.0177, put premium = $.0284, forward =$1.4882 -1.35 1.42 1.43 1.44 1.45 1.46 1.47 1.5 1.56 1.57 1.58 -1.4 -1.45 Cost of Accounts Payable -unhedged -buy fwd -buy call - sell put -1.5 -1.55 -1.6 Spot Price at Expiration