QUESTION 2 (30 MARKS) Uni Precision System (UPS) Bhd is a Malaysian exporter of vehicle components. UPS has agreed to deliver 4,000 units of component at a unit price of USD 100 to one US firm. Six-months credit is allowed to the US firm before payment is due. Als can borrow short term at 2% above bank base rate or invest short at base rate either in Malaysia or the US Exchange Rates MYR/USD bid ask Spot 4.3525 4.3528 1-month forward 4.3515 4.3520 6-month forward 4.3315 4.3320 6-month call option at a strike price of MYR4.4545 6-month put option at a strike price of MYR4.4550 6-month forecasted future spot rate: MYR 4.4560 Option premium: 1.5% of contract value Weighted average cost of capital: 10% b) Calculate the revenues to be incurred by UPS (in MYR) for each of these four approaches: i) Do Nothing/Unhedged (clearly provides an upside risk and downside risk scenario) (6 Marks) ii) Forward market hedging (3 Marks) 111) Money market hedging (8 Marks) iv) Currency option market (8 Marks)