Decide to sell the euro futures to hedge the currency risk

Assignment Help Financial Management

Reference no: EM131878279

Your company will receive 10 million euro from a product sales in France in 6 months. You are concerned about declining Euro vs USD exchange rate in 6 months and like to lock in the exchange rate now. Each Euro futures contract is worth 125,000 Euro. Euro rate currently is 1.3850/USD. A Euro futures contract with six months to expiration is at 1.3840.

You decide to sell the euro futures to hedge the currency risk. Six months later, Euro depreciates to 1.3750.

How many contracts you will be selling?

What’s the loss on your Euro sales?

What’s the gain on the futures contract?

Reference no: EM131878279

Questions Cloud

Twenty years in spreadsheet to show interest cost : What is the monthly payment on the mortgage? Construct the amortization of the loan for the twenty years in a spreadsheet to show the interest cost,

How many years are there until bond matures : The bond has a yield to maturity of 5.43 %. How many years are there until the bond matures?

The bond pays annual coupons and the next coupon : The bond pays annual coupons and the next coupon is due in one year. What is the coupon rate of the? bond?

Percentage change in price for zero coupon bond : What is the percentage change in price for a zero coupon bond if the yield changes from 8.5?% to 7.5?%?

Decide to sell the euro futures to hedge the currency risk : You decide to sell the euro futures to hedge the currency risk. What’s the gain on the futures contract?

Assumptions are being made by the EOQ model : What questionable assumptions are being made by the EOQ model?

He bought the bond just after the coupon date : Rudy purchased a 7?% coupon rate bond one year ago for its face value of $1,000. He bought the bond just after the coupon date.

The annualized interest rate on three year security : Assume that as of today the annualized interest rate on a three year security is 8%, while the annualized interest rate on a two year security is 6%.

Required return on stock-what is the current share price : If the required return on this stock is 12.5 percent, what is the current share price?

User Account

All Pages