Notes:

$4.$ Assume $117$ days between the date of February $14$ th$,2012,$ and June ${10}^{th},2012$ when the Yen exposure of $2,400,000,000$ payable occurs.

$5.$ To assess alternative ways of hedging, I have made it easy for you by pulling out the more important and relevant data from the Tables given in the case at the end of chapter $8$ so you can use them in answering the questions of this case: ADG has a Y$2,400$ million payable in $4$ months based on an agreement to buy $300,$OOO RAM chips at $8000$ each by June ${10}^{th}(4$ months out, payable in Yen$).$ The relevant market data include: The current spot exchange rate of $$\frac{0\mathrm{.}01274}{Y},$ four$-$month forward exchange rate of $$\frac{0\mathrm{.}01274}{Y},$ fourmonth call option on yen with the strike price set at $127$ cents for $100$ yen that is selling for $3\mathrm{.}11($Ask$)$ cents per $100$ yen. ADG's borrowing interest rate in dollars is $0\mathrm{.}62\%,$ while lending interest rate in yen is $0\mathrm{.}18\%.$

$6.$ Question: Compare three alternative hedging methods for this: Forward, money market, and option hedges. Hedging with futures is often inconvenient due to the standardized maturities and contract size and also possibly thin trading.