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# Tektronics is a manufacturer of scientific instruments and is a US based MNC. The company's treasurer, Dr. Robert Grosse, needs to choose an...

Tektronics is a manufacturer of scientific instruments and is a US based MNC. The company's treasurer, Dr. Robert Grosse, needs to choose an instrument to hedge a €1.00 million sale to Siemens, Germany and the payment is due in six months. His bank has given him the following quotes:

Market Rates and Internal Data

Spot Rate

$1.0538/€

Six-month forward rate$1.0687/€

Six-month euro interest rate 3.1250%

Six-month US dollar interest rate 6.0000%

Tektronics' weighted average cost of capital12.0000%

Premium on Six-month **call** option on euros at strike price $1.1200/ €1.2000 cents of USD / €

Premium on Six-month **put** option on euros at strike price $1.1200/ €6.1000 cents of USD / €

He needs your assistance in hedging this transaction exposure. His firm does not permit remaining unhedged.

Calculate the following:

- Forward Market Hedge
- Money Market Hedge at Market Rates
- Money Market Hedge at the firm's weighted avaerage cost of capital (WACC)
- Options Market Hedge
- Which hedging strategy is the best according to yoir calculations?