a) Produce a profit diagram in AUD for the unhedged profits of Sons of Midas. Your profit diagram should have profit in AUD on the y-axis and S, on the x-axis. Prepare your workings in Excel and include the profit diagram in your assignment submission. What movements in the gold price hurt/benefit Sons of Midas? (5 marks) Excel hint: In your Excel file, input the data listed above. Then, in one column, include a range of hypothetical USD gold prices in 6 months - start from a gold price of zero and increase this by increments of 50 until you reach 4,000. You should then have another column for AUD revenues and costs. Your AUD profit is calculated as AUD revenue less AUD costs. You should have an AUD profit for all your hypothetical USD gold prices. b) Explain how you could hedge the gold exposure of Sons of Midas with the 6- month forward contract at a forward price of USD 2,202.64. Produce a profit diagram in AUD showing the unhedged profits and hedged profits. (8 marks) c) From the option contracts listed above, explain how you could hedge Sons of Midas's gold exposure with a put option. Which put option have you chosen, and why? Produce a profit diagram in AUD showing the unhedged profits and hedged profits resulting from your chosen put option. (12 marks) d) From the option contracts listed above, explain how you could hedge Sons of Midas's gold exposure with a collar strategy. Which option contracts have you chosen, and why? Produce a profit diagram in AUD showing the unhedged profits and hedged profits resulting from your chosen option contracts. (15 marks) e) Compare the hedged profit from the collar strategy to the profit from a call bull spread strategy. What do you observe? Explain why. (5 marks)A B C D E F G H 5 Exchange rate USD per 1 AUD 0.6555 6 T 0.5 7 Ounces sold 100,000 8 Production costs (AUD per ounce) 2,600 Report in 1,000,000 10 Strike price (USD Call preminium Put preminium 11 per ounce) (USD per (USD per 12 2,480.00 15.94 285.57 13 2,375.00 33.09 200.64 14 2,265.00 64.7 125.32 15 2,202.64 90.57 90.57 2,157.41 113.33 69.36 2,050.00 180.9 32.51 1,940.00 267.35 12.02 1,835.00 360.99 3.59 Gold per ounce Production Production Revenue (USD Production Unhedged Unhedged (USD costs per ounce costs per millions) costs (USC profit (USD profit (AUD) 0 2.600 1704.30 170.43 -170.43 -260.00 50 2.600 1704.30 170.43 -165.43 -252.37 100 2,600 1704.30 10 170.43 160.43 -244.74 150 2,600 1704.30 15 170.43 -155.43 -237.12 200 2,600 1704.30 20 170.43 -150.43 -229.49 250 2,600 1704.30 25 170.43 -145.43 -221.86 300 2,600 1704.30 30 170.43 -140.43 -214.23 350 2,600 1704.30 35 170.43 -135.43 -206.61 400 2,600 1704.30 40 170.43 -130.43 -198.98 450 2,600 1704.30 45 170.43 -125.43 191.35 500 2,600 1704.30 50 170.43 -120.43 -183.72 550 2,600 1704.30 55 170.43 -115.43 -176.09 600 2,600 1704.30 60 170.43 -110.43 -168.47 650 2,600 1704.30 65 170.43 -105.43 -160.84 700 2,600 1704.30 70 170.43 -100.43 -153.21 750 2,600 1704.30 75 170.43 -95.43 -145.58 800 2.600 1704.30 80 170.43 -90.43 137.96 850 2,600 1704.30 85 170.43 85.43 -130.33 900 2.600 1704.30 90 170.43 80.43 122.70 950 2 600 1704.30 95 170.43 -75.43 -115.07 1,000 2 600 1704.30 100 170.43 -70.43 107.44 1,050 2,600 1704.30 105 170.43 -65.43 -99.82 1,100 2,600 1704.30 110 170.43 -60.43 -92.19 1,150 2,600 1704.30 115 170.43 -55.43 84.56 1,200 2,600 1704.30 120 170.43 -50.43 -76.93 1,250 2,600 1704.30 125 170.43 -45.43 -69.31 1,300 2,600 1704.30 130 170.43 40.43 61.68 1,350 2,600 1704.30 135 170.43 35.43 -54.05 1,400 2,600 1704.30 140 170.43 -30.43 46.42