Assume that the futures price of GPB on Wednesday, April 27, is given as follows:

Month	Open	High	Low	Last	Change	Settle	Estimated Volume	Prior Day Open Interest
MAY 22	1.2444	1.2484B	1.2391A	1.2471B	+.0019	1.2452	434	1,484
JUN 22	1.2427	1.2488	1.2391	1.2474	+.0018	1.2454	49,905	159,127

Assume that the spot price on Wednesday: 1.2552

You expect to make a 400,000 payment in British Pounds on close of business day, Wednesday, April 27. You decide to hedge your risk with futures contracts. Assume you that you enter into the position at close of day on Monday, April 25 at the futures price of 1.2422. The size of one futures contract on British Pound is 62,500 pounds.

d. What would have been the total cost in US$, if you had not hedged? Did you benefit from hedging?

e. What would be the effective price per British Pound?

c. What is the total cost in US$ after you have closed out your futures positions, and completed the spot market transaction?