Hello. I need help with question 2, part b. I'm not sure how to determine the size of the contract in order to figure out how many contracts I need to sell to make 90,000,000 yen.

Japanese Yen Futures Data Daily Settlements for Japanese Yen Futures Trade Date: Wednesday, 08/31/2016 Estimated Prior Day Month Open High Low Last Change Settle Volume Open Interest SEP 16 97140 97275 96640 96750 430 96740 109,315 158,411 DEC 16 97575 97670B 97045A 97130B 425 97140 2,743 5,530 MAR 17 98010B 97555A 97590A 440 97545 0 270 JUN 17 98230 98265B 98070A 98070A 440 98035 1 109 SEP 17 98520A 98535B 440 98500 0 9 DEC 17 445 99000 0 0 Daily Settlements for Japanese Yen Futures Trade Date: Friday, 09/02/2016 Estimated Prior Day Month Open High Low Last Change Settle Volume Open Interest SEP 16 96900 97370 95895 96320A 570 96250 174,571 153,908 DEC 16 97295 97705B 96300 96655B 570 96645 4,236 8,248 MAR 17 97300 98025B 96760A 97000 575 97055 14 272 JUN 17 98450B 97295A 97470B 565 97550 0 109 SEP 17 98935B 97750A 97870B 565 98015 0 5 DEC 17 98430A 98430A 565 98510 0 0 Spot data: Jul.Day YYYY/MM/DD Wdy USD/JPY 2457631 2016/08/30 Tue 0.0097124 2457632 2016/08/31 Wed 0.0096693 2457633 2016/09/01 Thu 0.0096895 2457634 2016/09/02 Fri 0.0096007 Henry Hub Natural Gas Futures Data Trade Date: Wednesday, 07/07/2016 Change Settle Estimated Prior Day Volume Open Interest Month Open High Low Last OCT 16 2.725 2.743 2.665 2.686 .041 2.676 142,945 213,544 NOV 16 2.855 2.869 2.802 2.815 .031 2.811 66,617 207,841 DEC 16 3.066 3.086 3.039 3.048 .013 3.046 34,300 75,412 JAN 17 3.196 3.213 3.169 3.177 .012 3.175 36,496 129,657 FEB 17 3.196 3.219 3.175 3.182 .012 3.182 5,807 31,902 MAR 17 3.154 3.178 3.139 3.144 .014 3.144 11,214 89,526 Trade Date: Friday, 09/09/2016 Estimated Prior Day Volume Open Interest Month Open High Low Last Change Settle OCT 16 2.810 2.844 2.783 2.797 .009 2.797 154,144 192,257 NOV 16 2.911 2.944 2.880 2.889 .027 2.890 93,799 218,404 DEC 16 3.138 3.168 3.107 3.116 .025 3.119 36,592 76,740 JAN 17 3.261 3.289 3.228 3.241 .023 3.243 35,175 134,375 FEB 17 3.271 3.289 3.231 3.242 .023 3.246 9,761 33,135 MAR 17 3.227 3.247 3.189 3.201 .022 3.205 14,251 90,487 Spot Data: 2016/09/06 2016/09/07 2016/09/08 2016/09/09 2.820 2.820 2.840 2.920 Futures and Options Homework 1 Due: Wednesday, September 21, 2016 1. Do the following exercises from the book: Chapter 2: Exercise 2.29 (if you have 8th edition) or 2.30 (9th edition) Chapter 3: Exercise 3.27 (if you have 8th edition) or 3.30 (9th edition) 2. You expect to receive 90,000,000 Japanese Yen on close of business day, Friday, September 2nd. You decide to hedge your risk with futures contracts. Assume that you enter into the position at close of day on Tuesday, August 30th. Futures and spot data is provided in the file HW1_data.doc. a. Describe the position you decide to enter (long or short). b. Describe the contract (what month, and what quantity). c. Document the price gain or loss every day that your position is open. d. What is the total cost in US$ after you have closed out your positions, and made your payment? e. What would have been the total cost in US$, if you had not hedged? Did you benefit from hedging? f. What was the effective cost per JPY? g. What would have been the total cost in US$ if you could have bought (or sold) a contract for exactly the amount you wanted to hedge (90,000,000 Yen)? h. Identify problems with your hedge. When do you think it is useful to hedge using futures and when it is not? 3. Devon Energy, a gas processing company, expects to pay for 400,000 mmBtu of natural gas at a close of day on Friday, September 9th. They want to hedge their position with Henry Hub natural gas futures. Assume that they enter into the position at close of day on Tuesday, September 6th. The size of one natural gas futures is 10,000 mmBtu. Futures and spot data are provided in the file HW1_data.doc. a. Describe the position they should enter (long or short, contract month). b. Compute the hedge ratio using data from Data_hw1.xls file. c. How many contracts do they need to buy or sell? d. Document the price gain or loss every day that their position is open. e. What is the total cost after they have closed out their futures position, and made their payment? f. What is the effective cost per mmBtu