The spot rate of the euro today is 1.0360/. The three-month futures price for the euro is $1.0940/. You expect the spot price three months from today to be $1.1280/. The euro contract size is 125,000.

1.If you decide to buy 95 euro 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 $1.25 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 100 euro contracts and the spot price of the euro at futures expiration ended up at $1.1260/?