Question: typed anawer please ! i need full answer to the last part of the Question A U.S. firm has a payable of 125,000 Swiss francs

typed anawer please ! typed anawer please ! i need full answer to the last

i need full answer to the last part of the Question

A U.S. firm has a payable of 125,000 Swiss francs in 90 days. The current spot rate is $.6698/SFr and the 90 day forward rate is $.6776/SFr. strike=$.68, 90 day call option on SFr: premium=$.0096 90 day put option on SFr: premium=$.0105 strike=$.68, 3% Interest rates US Switz. Possible spot rate in 90 days 90 day deposit rate 3% Spot Probability 90 day borrowing rate 3.2% 3.2% $.65 10% $.67 $.69 20% 70% Calculate the expected dollar cost of the payable for each of the following: (1) FORWARD HEDGE (2) MONEY MARKET HEDGE (3) OPTION HEDGE(S) (4) REMAINING UNHEDGED Should the firm hedge? If so, how? Consider both cost and risk in your decision

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