1.Explain the basic differences betweenthe operation of a currencyforward market and a futuresmarket.

 

2.Assume today's settlement price on a CME, EUR futures contract is $1.3140/EUR. You have a short position in one contract. Your performance bond account (or the deposit) currentlyhas a balance of $1,700 with the maintenance level of $1,000. The next three days' settlement prices are $1.3126, $1.3133, and $1.3049. Calculate the changes in the account balance from dailymarking-to-market and the balance of the performance bond account after the third day where EUR125,000 is the contract size of one EUR contract, includingcompute gain or loss.

 

3.Do problem2 again assumingyou have a long position in the futurescontract.

 

4.Compare and contrastforward and futures contracts.

 

5.How can currency futures be used by corporations?