It is 12th January and the following information is available for Euro () currency futures prices (contract size 62,500):

March 0.6871/

June 0.6915/

September 0.6990/ Note:

Assume 360 days in a year

(i) A Portuguese company is due to receive British Pound () 8 million in June. Show how the company can hedge its transaction risk using currency futures, assuming that the spot rate on expiry of the June futures contract is 0.6900/.

(ii) A Dutch company expects to pay British Pound () 3.5 million to a British supplier in September. Show how the company can hedge its transaction risk using currency futures, assuming that the spot rate on expiry of the September futures contract is 0.6960/