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As in investor you plan to buy 1,000 shares of a Swiss stock. The current price is SF950. The current exchange rate is $0.7254/SF. You

As in investor you plan to buy 1,000 shares of a Swiss stock. The current price is SF950. The current exchange rate is $0.7254/SF. You are interested in speculating on the stock but do not want to assume any currency risk. You plan to hold the position for six months. The appropriate futures contract currently is trading at $0.7250. Construct a hedge and evaluate how your investment will do if in six months the stock is at SF926.50, the spot exchange rate is $0.7301, and the futures price is $0.7295. The Swiss franc futures contract size is SF125,000. Determine the overall profit from the transaction.

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