Using the provided information, please check/correct existing answers and help with unanswered questions :)

Refer to the following information for Questions 10 to 13. Plains States Manufacturing has just signed a contract to buy agricultural equipment from Boschin, a German firm, for 1,250,000. The contract was signed injune with payment due six months later in December. The firm is considering several hedging alternatives to reduce the exchange rate risk arising from the transaction. To help the rm make a hedging decision you have gathered the following information. The spot exchange rate is $0.8924/ The six month forward rate is $0.8750/ The annualized Euro 6month borrowing rate is 9% (or 4.5% for 6 months) The annualized Euro 6month lending rate is 7% (or 3.5% for 6 months) The annualized U.S. 6month borrowing rate is 8% (or 4% for 6 months) The annualized U.S. 6month lending rate is 6% (or 3% for 6 months) 10. 11. 12. 13. If Plains States chooses to hedge its transaction exposure in the forward market, it will 1,250,000 forward at a rate of a. sell; $0.8750/ b. sell; $0.8924/ c. buy; $0.8750/ d. buy; $0.8924/ Plains States chooses to hedge its transaction exposure in the forward market at the available forward rate. The payment in 6 months will be a. 1,428571.43 b. $1,423571.43 c. 1,093,750.00 d. $1,093,750.00 Plains States could hedge the Euro payables in the money market. Using the information given, how much would the rm pay in six months through money market hedge? a. $1,120,888.89 b. $1,110,162.68 c. $1,110,111.11 d. $1,099,488.04 Given the information, which of the following is correct about a possible arbitrage opportunity? a. Borrow $, convert to euro, invest in euro, sell euro investment proceeds forward. b. Borrow euro, convert to $, invest in $, sell $ investment proceeds forward. c. Don't bother there is no arbitrage opportunity