Chronos Time Pieces. Chronos Time Pieces of Boston exports watches to many​ countries, selling in local currencies to stores and distributors. Chronos prides itself on being financially conservative. At least​ 70% of each individual transaction exposure is​ hedged, mostly in the forward​ market, but occasionally with options.​ Chronos' foreign exchange policy is such that the​ 70% hedge may be increased up to a​ 120% hedge if devaluation or depreciation appears imminent. Chronos has just shipped to its major North American distributor. It has issued a​ 90-day invoice to its buyer for . The current spot rate is ​$​/​, the​ 90-day forward rate is ​$​/. ​Chronos' treasurer, Manny​ Hernandez, has a very good track record in predicting exchange rate movements. He currently believes the euro will weaken against the dollar in the coming 90 to 120​ days, possibly to around ​$​/. a. Evaluate the hedging alternatives for Chronos if Manny is right​ (Case 1: ​$​/​) and if Manny is wrong​ (Case 2: ​). What do you​ recommend? b. What does it mean to hedge​ 120% of a transaction​ exposure? c. What would be considered the most conservative transaction exposure management policy by a​ firm? How does Chronos​ compare?