Examine an ex-post long hedging position for a future currency purchase.

a. Select a futures contract and use the expiration date on the futures contract as the date of your purchase.

b. Use the Chart screen (Chart ) to create multigraphs for the prices on the futures and spot exchange rate. On the Chart Menu screen, select Standard G chart; once you have loaded your futures and currency, go to "Edit" to put your graphs in separate panels.

c. Select a beginning date that you would have implemented your hedge and a closing date near the futures expiration as the date for purchasing the currency and closing your hedge. Calculate the profit or loss on the futures position from opening and closing at the futures prices at the beginning and ending dates, the cost of purchasing the currency on the closing date, and the hedged cost (currency purchase minus futures profit). Compare your hedged cost to the unhedged cost. In retrospect, was the hedge a good strategy?