Your firm is a Swiss exporter of bicycles. You have sold an order to a British firm for 1,000,000 worth of bicycles. Payment from the British firm (in pounds sterling) 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.

Select one:

a. Go short 100 12-month pound futures contracts; and long 200 12-month SFr. futures contracts.b. Go long 100 12-month pound futures contracts; and short 200 12-month SFr. futures contracts.c. Go short 100 12-month pound futures contracts; and short 200 12-month SFr. futures contracts.d. Go long 100 12-month pound futures contracts; and long 200 12-month SFr. futures contracts.e. None of the above

I've attached the currency graph - could you give the answer and then please explain the problem? Thanks