PLEASE ANSWER AND GIVE EXPLANATION

1. The futures contract size on the South African rand (ZAR) is $100,000. Futures prices on the USD ZAR contracts are quoted in rands per $1. Suppose futures price is R10.245 and spot price is R10.165. You wish to transfer $15 million next month to a South African bank in Pretoria. To hedge your position, calculate your hedge ratio.

149 contracts

150 contracts

None of the above

2. The futures contract size on the South African rand (ZAR) is $100,000. Futures prices on the USD ZAR contracts are quoted in rands per $1. Suppose futures price is R10.245 and spot price is R10.165. You wish to transfer $15 million next month to a South African bank in Pretoria. Suppose at time of offset, futures price is R10.65. What is your futures gain or loss?

R1,024,500 per contract (LOSS)

R40,500 per contract (LOSS)

R1,024,500 per contract (GAIN)

None of the above

3. If a bank has an Income Gap of $10 million, it can reduce its interestrate risk by:

paying a fixed rate on $10 million and receiving a floating rate on $10 million.

selling $20 million fixedrate assets.

buying $20 million fixedrate assets.