Exposure to hedge its forward obligation

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Reference no: EM131604021

Today is April 1. Korea’s LG Electronics (LG) expects to receive 134 million JPY from a Japanese customer in 60 days. The current spot exchange rate is 0.3 KRW/JP Y . The current futures price for June delivery is 0.27 KRW/JP Y. Assume LG buys future contracts that exactly match their exposure to hedge its forward obligation. What is LG’s net profit or loss if the spot rate in 60 days is 0.36 KRW/JP Y ? Net prof it or loss =

Reference no: EM131604021

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