This question, part (a), required candidates to use derivative products (forwards, futures and options) to hedge exchange rate risk of a dollar receipt and to advise the company on which product to employ. In part (a) many candidates presented adequate calculations of the cash flows using different derivative products but failed to advise adequately. For example, although options are generally more expensive they do provide more flexibility. And forwards may be cheaper but they do carry a greater risk of default. And so on. In some cases candidates had difficulty in calculating an estimate for the basis remaining and occasionally candidates tried to use money market hedges although information was not provided in the question to employ this technique.