Assumptions
A European Wheat Exporter entered into a contract on 25 March 2020 with an Indian Four Mill to supply 5 shipments of wheat at USD 150,000 each.
The Wheat Exporter entered into contracts with farmers in Europe to supply them the same quantity of wheat at EUR 125,000 each at the same time.
The shipments were to commence on 10th April and the 10th of every alternate month, with the last shipment on 10th December.
The Flour Mill agreed to pay the Wheat Exporter in 20 days from shipment date. The Wheat Exporter agreed to pay the farmers 30 days from shipment date
EUR/USD spot exchange rates and forward points were as follows
Date	Spot Rate		Forward Period	Forward Points
25-Mar-20	1.0890		1 month	10
30-Apr-20	1.0824		3 months	25
30-May-20	1.1119		5 months	41
30-Jun-20	1.1247		7 months	57
30-Jul-20	1.1872		9 months	73
30-Aug-20	1.1939
30-Sep-20	1.1726
30-Oct-20	1.1679
30-Nov-20	1.1938
30-Dec-20	1.2300
30-Jan-21	1.2124
Calculate the following												Marks
A) The amount of EUR and the profit margin that the Wheat Exporter expected to receive at EUR/USD spot rate on the date of the contract												25
B) The amount of EUR and the profit margin that the Wheat Exporter would have received assuming they converted USD to EUR at spot rates on receipt												25
C) The amount of EUR and the profit margin that the Wheat Exporter would have received had they bought EUR/USD using fx forward contracts												25
D) What Curreny risk hedge should the Wheat Exporter have used to protect their profit margin? Explain why												25
You can use the tables below for calculating your answers more easily. Highlighted fields should show values you calculated.
Items	Contract Rate	Spot Rate	Forward Rate
Contract Value in USD	750,000	750,000	750,000
Sale Proceeds in EUR		0	0
Cost of Goods in EUR	-625,000	-625,000	-625,000
Net Profit in EUR
Profit Margin
	(A)	(B)	(C)
Calculation Table	Mar-20	Apr-20	May-20	Jun-20	Jul-20	Aug-20	Sep-20	Oct-20	Nov-20	Dec-20	Jan-21	Total
Sale proceeds in USD	Contract	150,000		150,000		150,000		150,000		150,000		750,000
Payment to Suppliers in EUR			-125,000		-125,000		-125,000		-125,000		-125,000	-625,000
EUR/USD Spot Rate	1.0890	1.0824	1.1119	1.1247	1.1872	1.1939	1.1726	1.1679	1.1938	1.2300	1.2124
EUR Bought @ Spot												0
Fx Forward Points		10		25		41		57		73
Fx Forward Rate
EUR Bought @ Forward												0