You have been hired by International Exporters to consult on international transactions. You have been asked to provide guidance on the following:

a. Explain the difference between a Forward transaction and a Futures transaction,

b. Provide a recommendation for the following transaction: The company is exporting 50 all-terrain vehicles to Europe with a value of $2,500,000 and the current exchange rate is $1.06 to the Euro. There is a 40% probability exchange rates will move favorably and 60% probability exchange rates will move unfavorably. Which derivative do you recommend and why? (The $ is the home currency you are advising on)