1. Your u.s. firm has a £150,000 payable with a 3-month maturity. Which of the following will hedge your liability?
a. Sell a put option on £150,000 with a strike price in dollars
b. Buy the present value of £150,00 today at the spot exchange rate and invest in the U.K. and i£.
c. Take a short position in a forward contract on £150,000 with a 3-month maturity
d. Buy a put option on £150,000 with a strike price in dollars.
2. Which of the followinf would effectively hedge your exchange risk exposure?
a. Sell $$2,976,000forward
b. Sell £$2,976,000forward
c. Buy $3,445,231 forward
d. Buy £3445231 forward