To protect 1.25 million receivable next month firm can sell 20 pound futures (contract size 62,500) at $1.5600 or it can buys 40 put option contract (each 31,250) with a strike price of $1.5612 at a premium of 2 cents per pound. The pound is expected to trade in the range of $1.5250 to $1.6010, $1.5400 being the most likely price. Calculate firm's profit/loss on the portfolio of put option position and original contract if pound settles at the lowest, most likely and the highest value.

9.a. (7 points) Calculate firms profit/loss on the portfolio of futures position and original contract if pound settles at the lowest, most likely and the highest value.