1. The spot rate of the British pound today is 3320/. The three-month futures price for the British pound is $1.3210/. You expect the spot price three months from today to be $1.3660/. The British pound contract size is 62,500.
   1. If you decide to buy 78 British pound futures contracts, how much money do you need today as your initial investment (other than the margin you may need to post)?
   2. If you have available $3.4 million to speculate in the futures market as a buyer, how many contracts can you buy assuming no margin requirement?
   3. How much profit would you make if you buy 64 contracts and the spot price of the pound at futures expiration ended up at $1.2690/?
   4. If you were an MNC and you buy finished products from a provider in London for 24.50 million that are due to paid to you in three months, would you buy or sell the pound futures if you decide to hedge your position? Explain your answer.
   5. How many contracts would you buy or sell? What would be the dollar value of your imports when your pound bill comes due?
   6. How much would be your profit/loss from the foreign exchange transaction if the spot rate three months from today ended up at $1.3680/?