The three-month futures price for the euro is $1.0926/. You expect the spot price three months from today to be $1.1196 / and your friend expects that spot to be $1. 0424/. The euro futures contract size is 125,000.

If you were an MNC with A/P (accounts payable) of 264 million which are due from you in three months, would you buy or sell the euro futures? Explain your answer in your own words (as in how your position works to your benefit or against it).

How many contracts should you buy or sell? How much would be your euro A/P worth in dollars?