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lailings Review View All AaBbCcDdE AaBbCcDdE AaBbCcDc Aal No Spacing Heading 1 Normal 6. On Monday morning, an investor takes long position in a pound futures contract that matures on Wednesday afternoon. The agreed-upon price is $1.78 for 62,500. At the close of trading on Monday, the futures price has risen to $1.79. At Tuesday close, the price rises further to $1.80. At Wednesday close, the price falls to $1.785, and the contract matures. The investor takes delivery of the pounds at the prevailing price of $1.785. Detail the daily settlement process: What will be the investor's profit (loss)? 7. On January 10, 2011, IBM filed an order from Japanese company for computers worth of 125 million yen. The export sale is denominated in Japanese yen and is due on March 4th, 2011. IBM decides to hedge its yen receivables into IMM futures contracts. The spot rate is 130 yen per dollar and the March futures price is 125 yen per dollar. a. b. Calculate the number of futures contracts that IBM must sell to offset its yen exchange risk. Contract size is 12,500,000 yen. On March 4", the spot rate turns out to be 131 yen per dollar, while the March futures price is 130 yen per dollar. Calculate IBM's dollar gain or loss on its futures position. Was this hedge effective? Show your calculations. Apex Corporation must pay its Japanese supplier 125 million in three months. It is thinking of buying 20 yen call options (contract size is 16.25 million) at a strike price of 50.00800 in order to protect against the risk of a rising yen. The premium in 0.015 cents per yen. Alternatively, Apex could buy 10 three-month yen futures contracts (contract size is 12.5 million) at a price of $0.007940 per yen. The current spot rate is 1 = $0.007823. Suppose Apex's treasurer believes that the most likely value for the yen in 90 days is $0.007900, but the yen could go as high as $0.008400 or as low as $0.007500. 1. Diagram Apex's gains and losses on the call option position and the futures position within its range of expected prices. Ignore transaction costs and margins. Calculate what Apex would gain or lose on the option and futures positions if the yen settled at its most likely value. 3. What is Apex's bread-even future spot price on the option contract? On the futures contract