Question 5: Hedging Strategy (20 points) Suppose it is end of December 2021, and Maserati reviews its hedging strategy for the cash flows it expects to obtain from vehicle sales in North America during their calendar year 2023. Suppose Maserati entertains three scenarios: e The expected volume of North American sales in 2023 is 43,750 vehicles. e The worst-case scenario is 30% lower than the expected sales volume, and e The best-case scenario is 30% higher than the expected sales volume. Assume in each scenario that the average sales price per vehicle is $120,000 and that all sales are realized at the end of December 2023. All variable costs incurred by producing and shipping an additional vehicle to be sold in North America in 2023 are billed in euro and amount to euro 90,000 per vehicle. Characterize with a graph how Maserati's euro cash flows, net of variable costs, obtained from its North American sales depend on the spot exchange rate that prevails at the end of December 2023, if: (a) Maserati does not hedge its currency exposure at all; (5 points) (b) Maserati hedges by selling forward USS equal to the amount of expected 2023 sales with a two year forward contract; (5 points) (c) Maserati hedges by purchasing two-year European at-the-money put options on USD, granting the right to sell USD and receive euros at the strike exchange rate. These options are acquired in sufficient quantity to cover the expected 2023 sales. (5 points) (d) Based on your analysis of parts (a), (b) and (c), which hedging strategy should Maserati choose? (5 points)