a$)$ Compere and contras

Orrency future and forward contrast

b$)$ The current spot rate of the USD is TZ $1,500$ while one year formerd rate is TZ $1,500.$ A prominent financial analyst expects the spot rate of USD in one year to have the following probebility distribution.

One$-$year spot rate probability

$q,$

$1575q,20\%$

$q,30\%$

Qurrently, a one put on USD with exercise price of TZS $1575$ and maturing in one year is selling at $TZ100$ per USD while a call option with an exercise of TZS $1500$ maturing in one year is selling at TZS per USD. Further the following money market rate also is available. USD

$$

$TZS$

Reposit $8\%.q,5\%$ S $1$

Borrowing $9,\%q,$ ABCLTD receives$\{$USD $500,000$ in one year while BABU TTD expects to make a payment of $U$ million on a year.

or&

Pequired:

reach of the two firms above, determine which forward hedge or money market hedge would be a