75% or 50%? With CAD 1.682 billion cash flow exposure projectedover the subseque

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75% or 50%? With CAD 1.682 billion cash flow exposure projectedover the subsequent twelve months what is the loss (in US$ amount)if CAD appreciates 3.1% from the value of 1.578CAD/$ on the date ofmemo assuming the firm uses the passive 50% hedging policy (becareful here because its indirect quote so a 3.1% CADappreciation means the exchange rate will be 1.529CAD/$). What isthe loss if the firm hedges 75% of the exposure? Notes: a) GM canbuy CAD forward contract at a forward rate of 1.5667CAD/$; GM canalso buy CAD call options with a strike price of 1.5667CAD/$; youcan ignore the costs of hedging (such as option premiums; i.e.assuming the options are free). 2. Additionally Ostermann wantedyour analysis to reflect the excess cash of CAD 660 million heldby GM Canada (which means you can deduct this amount from the CAD1.682 billion exposure).

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