currency hedging consists of the purchase of 28 contracts of AUD 125,000. Details of this coverage appear in the table below. Determine if the hedge is perfect and the effective exchange rate for that hedge. Submit your calculations.

DATE	exchange market	rate AUD/USD	expiry date
16 june	interbank	0,7772	spot date indication
17 june	stock market	0,7686	expires 20 October
14 October	Interbank	0,7412	Spot
18 October	stock market	0,7416	expires 20 October

Reply:

Hedging transaction details Debt value / spot market transaction Contract market transaction June 16 Amount due of AUD 3,500,000 Rate ______________ ________________

June 17 ______ of 28 futures contracts of AUD 125,000 at the rate __________ ______________

October 14 _____________________________ _____________________________ _______________

October 18 ______ of 28 futures contracts of AUD 125,000 at the rate __________ ______________

Net income in the futures market is ________ ______________

Net profit in the spot market is ________ _______________ The cumulative result of the two markets is __________________________________

The effective exchange rate is: (write down your calculations) ____________________________