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Andy, who works for an American company called Haystack shipping Co., is responsible for managing...

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Andy, who works for an American company called Haystack shipping Co., is responsible for managing transaction exposure. The company will receive 1,034,000 Canadian dollars (CAD) from one of its clients in 30 days. However, Andy was concerned about the fluctuation in the foreign exchange market, therefore he forecasted the possible spot rates for a Canadian dollar in 30 days, shown in the table below. If the current spot rate is USD 0.9569/CAD and the 30-day forward rate is USD 1.0515/CAD, what will be the probability that hedging using the forward contract results in more US dollars received than not hedging? Possible Spot Rate in 30 Days Probability 0.898 18% 1.1022 23% 1.1302 28% 1.1724 31% a. 18% b. 41% C. 82% O d. 31%

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