Question
Almobarak trading Co. that is based on the US predicts that it will need A$100,000 in March when the company orders car parts from the
Almobarak trading Co. that is based on the US predicts that it will need A$100,000 in March when the company orders car parts from the Australian supplier. So, the company purchased a January future contract for A$100,000 with a settlement date on March 19 at $0.53/A$. On February 15, the company decided that it will not need car parts because it reduced its production levels. Thus, there will be no need for the A$100,000. What to do now? Assume that Almobarak Co. Was able to sell a future contract to off-set its long position with a future price of $0.56/A$. How would this change their profit/loss?
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