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Determine the outcome of a future hedge

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Question - On January 2 of a particular year, an American Firm decided to close out its account at a Canadian bank on February 28. The firm is expected to have 5 million Canadian dollars in the account at the time of withdrawal. It would convert the funds to U.S. Dollars and transfer them to a New York bank. The relevant spot exchange rate was $0.7564. The March Canadian dollar futures contract priced at $0.7541. Determine the outcome of a future hedge if on February 28 the spot rate was $0.7207 and the future rate was).7220. All prices are in US Dollars per Canadian dollar. The Canadian dollar futures contract covers CD 1, 00,000.

Reference no: EM132976658

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