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For this and the next question. A Chicago merchant plans to import a shipment of materials from France costing 1,000,000. Spot exchange rate is $1.28.

For this and the next question. A Chicago merchant plans to import a shipment of materials from France costing 1,000,000. Spot exchange rate is $1.28. To hedge against a rise in the value of the euro, the merchant buys euro futures at a futures price of $1.32. Contract size is 125,000. Calculate the hedge ratio, keeping in mind that fractional contracts are not traded.

About 8 contracts

About 9 contracts

About 10 contracts

None of the above

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