Suppose Cotton Bolls does business with companies in Israel and Singapore. Cotton Bolls expects to pay 500,000 new Israeli shekels (ILS) and receive 125,000 Singapore dollars on the Friday before the third Wednesday of April. Forward exchange rates for that date are F_T ^$∕ILS = $0.1625∕ILS and F_T ^$∕S$ = $0.65∕S$.

a. Show timelines illustrating each transaction.

b. How would Cotton Bolls hedge these transactions with $/ILS and $/S$ futures contracts?

c. Suppose the forward rate is S$0.2500/ILS. Describe a cross hedge that would accomplish the same objective as the two hedges in part (b).