A U$.$S$.-$based company recently concluded a sale for $3,000,000$ that is due in $90$

days. Given the following exchange rates and interest rates, compute the available hedging

choices and recommend what transaction exposure hedge is in the company$$s best interest.

$($Note that information is not given on options, so only three strategies need to be compared.$)$

Spot rate $$1\mathrm{.}7620/$

Expected spot in $90$ days $$1\mathrm{.}7850/$

$90-$day forward rate $$1\mathrm{.}7550/$

$90-$day dollar deposit rate $6\mathrm{.}0\%$ p$.$a$.$

$90-$day dollar borrowing rate $8\mathrm{.}0\%$ p$.$a$.$

$90-$day pound deposit rate $8\mathrm{.}0\%$ p$.$a$.$

$90-$day pound borrowing rate $14\mathrm{.}0\%$ p$.$a$.$

WACC $12\mathrm{.}0\%$ p$.$a

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