A U$.$S$.$ based MNC has just signed a contract with a Swiss company that calls for the U$.$S$.$ MNC to provide the Swiss company with a variety of consumer goods over a three$-$month period that entails payments in Swiss francs $($SF$).$ The current dollar value of the SF contract is $$286$ million based on the current exchange rate of $$1\mathrm{.}0832/$SF$.$ At the same time the U$.$S$.$ company signs a three$-$month contract with another Swiss company to buy supplies for three$-$month delivery and agrees to settle its bill in Swiss francs. The dollar value of the SF contract is $$91\mathrm{.}024$ million, also base on the same exchange rate. At the same time, the U$.$S$.$ MNC signs a contract to export its consumer goods to Saudi Arabia and receive payment in Saudi riyals $($SR$)$ in three months. The dollar value of the Saudi riyal contract is $$81$ million $($Saudi Arabia pegs its currency value to the dollar at the fixed rate of $$0\mathrm{.}2700/$SR$).$ The U$.$S$.-$based MNC is particularly worried about a high degree of uncertainty in the foreign exchange markets. So$,$ it decides to evaluate its hedging alternatives. The following information is available:

Spot $$1\mathrm{.}0832/$SF Bid $$1\mathrm{.}0896/$SF Ask

SF $3-$month forward $$1\mathrm{.}0883/$SF Bid $$1\mathrm{.}0894/$SF Ask

SF $6-$month forward $$1\mathrm{.}0889/$SF Bid $$1\mathrm{.}0894/$SF Ask

SR $3-$month Forward$*$ $$0\mathrm{.}2688/$SR Bid $$0\mathrm{.}2712/$SR Ak

SF $3-$month futures $$1\mathrm{.}0884/$SF Bid $$1\mathrm{.}0888/$SF Ask

SF $90-$day call option #$1$ $$1\mathrm{.}1010/$SF strike $$0\mathrm{.}0146/$SF premium

SF $90-$day put option #$1$ $$1\mathrm{.}1010/$SF strike $$0\mathrm{.}0120/$SF premium

SF $180-$day call option #$2$ $$1\mathrm{.}1020/$SF strike $$0\mathrm{.}0242/$SF premium

SF $180-$day put option #$2$ $$1\mathrm{.}1020/$SF strike $$0\mathrm{.}0312/$SF premium

$90-$day dollar interest rate $5\mathrm{.}20\%$ p$.$a$.($deposit$)7\mathrm{.}20\%$ p$.$a$.($loan$)$

$90-$day SF interest rate $4\mathrm{.}60\%$ p$.$a$.($deposit$)5\mathrm{.}80\%$ p$.$a$.($loan$)$

$90-$day Saudi interest rate $0\%$ p$.$a$.($deposit$)0\%$ p$.$a$.($loan$)$

$*$ Only Forward contracts are available on the SR $($no futures and no options$).$

II$.$ Through detailed transaction narrative $($and in full sentences$)$ followed by the necessary calculations, show how each of these hedging alternatives can be achieved $($please use my example as a guide and adjust the narrative to fit your solution $($do not just copy my narrative$).$ Calculations alone, if correct, will only earn half the credit$).$