**PLEASE SHOW ALL WORKINGS AND ANSWER WITHOUT EXCEL

Magnetic Inc. is a manufacturing firm headquartered in Canada. Today is the 1st of December 2021, and the firm must pay 5 million British pounds (GBP) to a British supplier in six months' time (1st June 2022). The treasurer of Magnetic Inc. wants to hedge against exchange rate movements by entering a forward contract with ABC Bank. The 6-month forward quote for the CAD/GDP (Canadian Dollar/Great British Pound) exchange rate is 1.7007. Required: (i) Calculate and explain the payoff from a long position in a forward contract for Magnetic Inc. if the spot exchange rate is 1.9001 on the 1st of June 2022. Show your workings. (5 marks) Calculate and explain the payoff from a short position in a forward contract for ABC Bank if the spot exchange rate is 1.9001 on the 1st of June 2022. Show your workings. (ii)