Question
On March 3rd, Ford agrees to import auto parts worth 10.5 million euros from Germany. The parts will be delivered Sept. 5th and are payable
On March 3rd, Ford agrees to import auto parts worth 10.5 million euros from Germany. The parts will be delivered Sept. 5th and are payable immediately in euros. Ford decides to hedge its euro position by entering into IMM futures contracts. The euro futures contract is for 125,000 euros and goes into delivery on Sept. 17th. The March 3rd spot rate is $0.545/euro, and the March 3rd September futures price is $0.555/euro. On Sept. 5th, the spot rate turns out to be $0.557, while the Sept. futures price is $0.5565. Calculate Ford's net dollar gain or loss on its futures position.
$21,000 $15, 750 -$21,000 -$15,750
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