forward points to the spot. If the forward bid points > forward ask points ( forward discount), subtract the forward points from the spot. c) Money market hedge. Explain the implementation of this hedge and the cash flows at spot and at maturity. 1What is the effective exchange rate that Wainwright would have to pay if they used this alternative? Mat is the 96 cost of the machinery? d) Without using any prices, number, or calculations, describe how futures could be used to hedge this risk. Assume the currency futures market for sterling that is fairly priced. Explain in detail the implementation of this hedge and the cash flows 1' transactions you would have to make on day one and at the time of the account payable if you were to use a futures hedge. (How many contracts would you buy or sell, when would you remove the hedge, howfwheu would you pay the account payable, etc.) e) BNYM option hedge. 1. Use the Black-Scholes model to see the implied volatility of the BNYM option premium using only the data in the case. In other words, what combinations of the given strike price, maturity, volatility, spot, and the USD LIBORfSterling LIBOR rates would generate the call option price. Include a screenshot of the option model. ii. ii. Evaluate historical volatility over 3 months, 6 months, and 1 year, using actual spot $f prices (not from the case) over the past three months and past year starting from the actual day you download the data. http:ffwwwduvestopedia.comz'askfanswersf02 1015mow-can-you-calculate-volatility- excelasp iii. iii. Look onlinefBloomberg for current actual quotations of one year $f implied