We have 10 million South African rand that is payable in one year (we have to pay it to a South African company)

Assume the spot exchange rate is 10.02 rand equal one US dollar. Also, assume that the forward exchange rate is 10 rand equal one dollar. Furthermore, either calls or puts cost .01(1%).

The exercise price of the options is 10 rand per dollar and 11 rand per dollar for both types of options.

Expound on how to hedge the aforementioned exposure. Moreover, the market expectation is that the rand will appreciate against the dollar. We want to implement transactions exposure.

Ascertain that we use 1) a forward contract, or an options approach.

We have the same information as above. In this case, we want to hedge via risk sharing, or leading and lagging.