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Basic information for this currency pair USD/JPY # units required of the foreign currency 100,000,000 Direct pair (Y/N) N # contracts needed to complete the
Basic information for this currency pair | USD/JPY | |||||
# units required of the foreign currency | 100,000,000 | |||||
Direct pair (Y/N) | N | # contracts needed to complete the number of units | 8 | |||
BId | Ask | Transaction cost to trade one futures contract | $ 5.00 | |||
Indirect price (beginning) | 131.18 | 131.21 | Transaction cost to trade one options contract | $ 7.50 | ||
Indirect price (end) | 132.78 | 133.81 | ||||
Direct price (beginning) | 0.007560 | 0.007561 | 4/7/2023 | DC1 date | ||
Direct price (end) | 0.007470 | 0.007474 | 4/14/2023 | DC2 date | ||
Pip converter (100 or 10000) | ||||||
100 | ||||||
Futures contract converter | ||||||
1 | ||||||
Option price adjustment factor (1,100,10000) | ||||||
1 |
2. Assume that on the day of DC1, you had contracted to purchase imports, which would require you to pay 100 million units of the currency on the day of DC2. | ||||||
a. If you had hedged your position with a forward hedge, how many dollars would you have paid for the goods as of the end of the period? | ||||||
Initial spot | Total cost | |||||
Fwd points | ||||||
Unit cost | ||||||
b. If you had hedged your position with a futures hedge, how many dollars would you have paid for the goods as of the end of the school term? | ||||||
Final spot | ||||||
Futures price (beg) | Total cost (before CME costs) | |||||
Futures price (end) | $ 120 | |||||
Unit cost | Total cost |
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