You are hired as a financial coordinator for a local car dealership that imports cars from your assigned unique country/currency (Swedish Kronas).
The dealership just imported cars worth $1,000,000 using the exchange rate as of the date you are completing this assignment.
What you owe to the foreign car manufacturer is in their own currency (i.e. your assigned unique currency).
You have the cars at your lot right now.
You need to pay the foreign manufacturer, in their own currency, within three (3) months.
Please be explicit in your answers and show all your work.
Please explain how you can hedge against losing money (as foreign exchange rates change) using options.
Please explain explicitly whether you would buy/sell call/put options and how many contracts.
Please show profit and loss situation using two possible outcomes
(1) USD loses value against your assigned currency,
(2) USD gains value against your assigned currency.