On 1 st March 2022, the US subsidiary of Greenfields plc signed a contract to sell two batches of seed drills to Jordanian company Palermo Plc for JD12,000,000, with JD7,000,000 payable on 1 st June 2022 and JD5,000,000 on 1 st September 2022. The US subsidiary's director of finance now wonders if the company should hedge against a reversal of the recent trend of the Jordanian Dinar. The current spot rate is $1.10/JD. The US subsidiary has three hedging alternatives available: a) Hedge in the forward market. The 3-month forward exchange quote is $1.1060/JD, the 6-month quote was $1.1130/JD, the 9-month quote was \$1.1134/JD, and the 12-month quote was $1.1138/JD. b) Hedge in the money market. The company could borrow Jordanian Dinars from the Munich branch of Deutsche Bank at 8% c) Hedge with foreign currency options. June put options are available at a strike price of $1.13/JD for a premium of 2% per contract and September put options are available for the same strike price of $1.13/JD at a premium of 1.2%. June call options are available at strike price of $1.1000/JD for a premium of 3% per contract, September call options are available at strike price of $1.1000/JD for a premium of September call options are available at strike price of $1.1000/JD for a premium of 2.6% The US subsidiary has a cost of capital of 12%. Required: B1) Indicate the factors that influence changes in exchange rates between currencies. Describe a theory to estimate future spot rates.