Based on case study Hedging at Porsche, Nagel $(2015)3.$ Assume that Porsche considers an alternative scenario to the scenario described in question $2$: A

low$-$sales scenario with $30\%$ lower than the expected sales volume. Everything else remains the

same as in question $2.$ Assuming different spot exchange rates briefly characterize $($a chart is

sufficient$)$ how Porsche$$s EUR cash flows, net of variable costs, obtained from its North

American sales depend on the spot exchange rate that prevails at the end of July $2009$ under this

alternative scenario, if:

a$.$ Porsche does not hedge its currency exposure at all;

b$.$ Porsche hedges its currency exposure by selling a USD forward contract at a forward rate

of EUR $0\mathrm{.}65/1$USD for the amount of expected $2009$ sales from question $2($and not the

sales in the low$-$sales scenario$)$ with a time to maturity of two years;

c$.$ Porsche hedges its currency exposure by buying a European put option contract with two

years to maturity on USD $($providing Porsche the right to sell USD, receiving EUR, at the

strike exchange rate of EUR $0\mathrm{.}65/1$USD$)$ in sufficient quantity to have the right to sell an

amount of USD equal to expected $2009$ sales from question $2($and not the sales in the

low$-$sales scenario$).$ Assume the premium for the put option is EUR $50,000$

Again, as in question $2,$ a chart adding this additional scenario is enough.

$4.$ Based on your analysis of questions $2$ and $3,$ what$$s your view on the foreign exchange hedging

strategy and the hedging instruments chosen by Porsche? If you were Porsche$$s CEO, would you implement a different strategy?