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The spot rate for euros =$1.25/ and the 3 -month future is $1.20/ The spot rate for pounds =$1.15/E and the 3-month future is $1.05/E
The spot rate for euros =$1.25/ and the 3 -month future is $1.20/ The spot rate for pounds =$1.15/E and the 3-month future is $1.05/E You owe 1,000,000 in 3 months You are going to recelve 1,000,000 in 3 months If you choose to hedge with futures you must think The spot rate in 3 months will be below $1.20/6 in three months and the spot rate will be below $1.05/E in three months The spot rate in 3 months will be above $1.20/6 in three months and the spot rate will be above $1.05/E in three months: The spot rate in 3 months will be above $1.20/ in three months and the spot rate will be below $1.05/ in three months The spot rate in 3 months will be below $1.20/ in three months and the spot rate will be above $1.05/ in three months
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