Exercise: Techniques for hedging payables: Assume Microsoft has to pay for AU $ 100 million supplies in 1 year. Microsoft has to decide whether to protect its position and if so decide what kind of protection ("Coverage") is the most convenient. Use the following information to conduct your analysis and make the right choice. Spot Rate of Au $ $0.77 Forward rate Au $- 1 year $0.77 One year call option Exercise price- $0.70 Premium - $0.05 One year-put option Exercise price- $0.72 Premium - $0.01 U.S 7% 9% AUD (AUSTRALIA) 4% 6% Probability 25% Rate Forecasted spot rate of $0.73 AU$ $0.74 $0.76 45% 30%