Confirmation exercise for 2020 assignment re commodity and FX futures.

(a)You are a baker in Kokkola and you entered the contract on the 1^st of April 2007. You are contracted to supply Swedish supermarket chain with bread for premises bake for two years at a fixed price of SEK 6,60a kilo. You will supply 10,000 kilos a week.

You have calculated the costs per unit as follows:-

Wheat15c

Other ingredients5c

Labour20c

Overhead26c

Total Cost66c

Calculating the FX future rates

note that the ECB Base rate at 1^st April 2007 was 3,75% and Swedish Central Bank Base was 2%

. This calculated a one for euro-rouble so if you want a six months rate divide interest rates by 2 and if you want an 18-month rate increase them by half.

*assume futures price of wheat is the same as the world price on 1^st April 2007 - though in fact of course it would be a little higher given the need to include the costs of storage.

You supply the Swedes once a month - what credit terms do you offer, what INCO terms do use, and what documentation is associated with the transactions.

REFERENCE;

Commodity rates at Wheat - Daily Price - Commodity Prices - Price Charts, Data, and News - IndexMundi

FX at ECB euro reference exchange rate: Swedish krona (SEK) (europa.eu)