You plan to visit Geneva, Switzerland, in three months to attend an international business conference. You expect to incur a total cost

of SF$5,000$ for lodging, meals, and transportation during your stay. As of today, the spot exchange rate is $$0\mathrm{.}60$ per swiss franc and the

three$-$month forward rate is $$0\mathrm{.}63$ per swiss franc. You can buy the three$-$month call option on SF with an exercise price of $$0\mathrm{.}64$ per

swiss franc for the premium of $$0\mathrm{.}05$ per swiss franc. Assume that your expected future spot exchange rate is the same as the forward

rate. The three$-$month interest rate is $6$ percent per annum in the United States and $4$ percent per annum in Switzerland.

Required:

a$.$ Calculate your expected dollar cost of buying SF$5,000$ if you choose to hedge by a call option on SF$.$

b$.$ Calculate the future dollar cost of meeting this SF obligation if you decide to hedge using a forward contract.

c$.$ At what future spot exchange rate will you be indifferent between the forward and option market hedges?