vices, accessories, and third-party digital content and applications. The company offers iPhone,…

vices,
accessories, and third-party digital content and applications. The
company offers iPhone, a line of smartphones; iPad, a line of
multi-purpose tablets; and Mac, a line of desktop and portable
personal computers, as well as iOS, macOS, watchOS, and tvOS
operating systems. On August 30, Apple sold inventory to Yara
International, a Norwegian company. The inventory was priced
at NOK 46.65 million and due in 180 days. Apple’s
multinational finance team collected the following currency and
market quotes. Apple forecasts the Norwegian Krone (NOK) will
be at about $0.1125/NOK in 180 days.

Current spot rate ($/NOK)	$0.1095
180-day forward rate ($/NOK)	$0.1105
Apple’s WACC	4.500%
180-day dollar interest rate	2.000%
180-day krone interest rate	1.250%
180-day dollar borrowing rate	4.000%
180-day krone borrowing rate	3.000%

How should Apple hedge its foreign currency transaction
exposure?

Group of answer choices

Apple should use a money market hedge investing in krone

Apple should use a money market hedge investing in its
operations

Apple should do nothing

Apple should use a money market hedge investing in dollars

Apple should use a forward hedge