Which of the following provides the best hedge against exchange variations in the value of a stream of income in a foreign currency where the payments are expected to occur in equal amounts over a period of five years?

Multiple Choice

Borrowing in the foreign currency with repayment due at the end of the five years.

Borrowing in Canadian dollars with repayment due at the end of the five years.

Borrowing in the foreign currency with annual repayments equal to the expected annual revenue cash flows.

Borrowing in Canadian dollars with annual repayments equal to the expected annual revenue cash flows.