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On January 10, Volkswagen agrees to import auto parts worth $7 million from the United States. The parts will be delivered on March 4 and
On January 10, Volkswagen agrees to import auto parts worth $7 million from the United States. The parts will be delivered on March 4 and are payable immediately in dollars. VW decides to hedge its dollar position by entering into IMM futures contracts. The spot rate is $0.8947/ and the March futures price is $0.9002/. On March 4, the spot rate turns out to be $0.8952/, while the March spot price is $0.8968/. Calculate VW's net euro gain or loss on its futures position. Compare this figure with VW's gain or loss on its unhedged position.
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