Your firm is a U$.$K$.-$based exporter of British bicycles. You have sold an order to an American firm for $$1,000,000$ worth of bicycles. Payment from the

American firm $($in U$.$S$.$ dollars$)$ is due in six months. Detail a strategy using futures contracts that will hedge your exchange rate risk.

Multiple Choice

Go short $12$ six$-$month futures contracts; pay $555,600.$

Go long $9$ six$-$month futures contracts; raise approximately $537,600.$

Go short $9$ six$-$month futures contracts. Pay approximately $537,600.$