2. The spot rate of the euro today is 1.0360/. The three-month futures price for the euro is $1.0940/. You expect the spot price three months from today to be $1.1280/. The euro contract size is 125,000.

A) If you were an MNC and you buy raw materials and parts from a German supplier for 64 million that are due to be paid in three months, would you buy or sell the euro futures if you decide to hedge your position? Explain your answer.

B) How many contracts would you buy or sell? What would be the dollar value of your exports when your euro receipt comes due?

C) How much would be your profit/loss from the foreign exchange transaction if the spot rate three months from today ended up at $1.1380/?