Toys, Inc., a US-based firm, delivers a large shipment of toys to Germany and expects to receive 1,000,000 in three months. The current spot rate is $1.33/. Assume that 3-months put options on the euro are available with an exercise price of $1.35 and a premium of $0.06 per unit; 3- months call options on Euro are available with an exercise price of $1.36 and a premium of $0.05 per unit.

(a)	Does Toys, Inc. need to buy put or call options to hedge the currency exposure? (1 marks)

(b) Calculate the break-even price of the option you named in b). (2 marks) (c) Toys, Inc. hedges their currency exposure with options. Assume a spot rate in three month is $1.36/. What are the net proceeds from the sale of 1,000,000? Show your calculations. (3 marks)

(a) put (b) $1.29 per (c) $1,300,000

Can you show me step by step please