2 Assume that, at the end of September, the spot rate turns out to be 1.55/ and...
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2 Assume that, at the end of September, the spot rate turns out to be €1.55/£ and a futures contract taken out at the end of September to expire on 13 December is quoted at €1.50/£. Estimate the total gain or loss earned by Malaika plc. (25 marks)
Malaika plc, a British company, is planning to make a payment in euros of €150 million at the end of September.
However, the nearest maturity date for a euro futures contract is at 13 December and it is now 29 January. The face value of one euro futures contract is €250,000. The spot rate today is €1.49/£ and the futures rate is €1.45/£.
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