Sell in order to hedge its forward obligation

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Today is April 1. Korea’s LG Electronics (LG) expects to receive ¥160,000,000 from a Japanese customer in 60 days. The current spot exchange rate is Won0.1250/¥. The current futures price for June delivery is Won0.1200/¥. The size of a yen futures contract is ¥10,000,000. How many futures contracts should LG buy or sell in order to hedge its forward obligation? What is LG’s net profit or loss if the spot rate in 60 days is Won0.1400/¥?

Reference no: EM131869802

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