Question
Boeing (an American company) has sold Lufthansa (a German airline) a jumbo jet for for Euro 273 million. Boeing is expecting to receive payment on
Boeing (an American company) has sold Lufthansa (a German airline) a jumbo jet for for Euro 273 million. Boeing is expecting to receive payment on July 5th. The current exchange rate is $1.28 / Euro and the September Euro futures are trading at $1.3 / Euro. The contract size is 125,000 Euros. What is the effective dollar amount Boeing can expect to receive, if the spot rate on July 5th turns out to be $ 1.34 / Euro and September futures' price on that day is $ 1.38 / Euro?
Provide your answer rounded to the nearest integer.
Note that here there is no cross-hedging, so you don't have to worry about sensitivities, just about relative sizes of the futures contract and the amount needed, when you establish the number of contracts to buy/sell.
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