On February $15,$ BMW agrees to import engine components worth $$8$ million from the United States. The components will be delivered on March $20$ and are payable immediately in dollars. BMW decides to hedge its dollar exposure by entering into IMM futures contracts. The spot rate on February $15$ is $$0\mathrm{.}9020/$ and the March futures price is $$0\mathrm{.}9085/.$ On March $20,$ the spot rate turns out to be $$0\mathrm{.}9035/,$ while the March futures price is $$0\mathrm{.}9057/.$ Calculate BMW$\text{'}$s net dollar gain or loss on its futures position. $[$Note: Euro contract size $=125,000]$

Question $6$Answer

a$.$

Loss $$13,125$

b$.$

Gain $$24,500$

c$.$

Gain $$22,400$

d$.$

Gain $$32,375$