Your firm is a Swiss exporter of bicycles. You have sold an order to a French firm for 1,000,000 worth of bicycles. Payment from the French firm (in euro) is due in 12 months. Detail a strategy using futures contracts that will hedge your exchange rate risk. Have an estimate of how many contracts of what type and maturity.

				U.S. $ equiv.								Currency per U.S. $
Contract Size			Country	Tuesday				Monday				Tuesday				Monday
	10,000		Britain (pound)	$	1.9600			$	1.9400				0.5102				0.5155
			1 month forward	$	1.9700			$	1.9500				0.5076				0.5128
			3 months forward	$	1.9800			$	1.9600				0.5051				0.5102
			6 months forward	$	1.9900			$	1.9700				0.5025				0.5076
			12 months forward	$	2.0000			$	1.9800				0.5000				0.5051
	10,000		Euro	$	1.5600			$	1.5400				0.6410				0.6494
			1 month forward	$	1.5700			$	1.5500				0.6369				0.6452
			3 months forward	$	1.5800			$	1.5600				0.6329				0.6410
			6 months forward	$	1.5900			$	1.5700				0.6289				0.6369
			12 months forward	$	1.6000			$	1.5800				0.6250				0.6329
SFr.	10,000		Swiss franc	$	0.9200			$	0.9000			SFr.	1.0870			SFr.	1.1111
			1 month forward	$	0.9400			$	0.9200			SFr.	1.0638			SFr.	1.0870
			3 months forward	$	0.9600			$	0.9400			SFr.	1.0417			SFr.	1.0638
			6 months forward	$	0.9800			$	0.9600			SFr.	1.0204			SFr.	1.0417
			12 months forward	$	1.0000			$	0.9800			SFr.	1.0000			SFr.	1.0204

Multiple Choice

• Go short 100 12-month euro futures contracts; and short 160 12-month Swiss franc futures contracts.

• Go long 100 12-month euro futures contracts; and long 160 12-month Swiss franc futures contracts.

• Go long 100 12-month euro futures contracts; and short 160 12-month Swiss franc futures contracts.

• Go short 100 12-month euro futures contracts; and long 160 12-month Swiss franc futures contracts.

• none of the options