1. The three-month futures price for the British pound is $2660/. You expect the spot price three months from today to be $1.2980/. The British pound contract size is 62,500/ct.
   1. If you decide to buy 56 British pound futures contracts, how much money do you need today as your initial investment other than the margin you need to post?
   2. If you have available $1.4 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 56 contracts and the spot price of the pound at futures expiration ended up at $1.2280/?
   4. If you were the representative of an MNC that sells parts and raw materials to a distributer in London for 12.25 million that are due to be received by the MNC in three months (A/R), would you buy or sell the pound futures if you decide to hedge the MNCs position?
   5. How many contracts would you buy or sell? What would be the dollar value of the MNCs exports when it receives the pound payment?
   6. How much would be the MNCs profit/loss from the foreign exchange transaction if the spot rate three months from today ended up at $1.3040/?