Volume per Contract Cotton Dec Cotton Mar 17 Sell in millions by March 2017= Standard Deviation of Spot price = Standard Deviation of Future price = Correlation= Optimum Ratio for 100% Optimized Optimized Ratio adjusted Total Contracts Optimum number of contracts (rounded) Transaction on Delivery/Expiration Day Increase/Decrease in Spot Prices Scenarios - Spot Prices Cost from cotton sales + Profit/Loss form Forward Contract Net Payment for the European Goods Units 50,000 cents per lbs 50,000 cents per lbs 4,000,000 4.000% 3.500% 0.80x $0.05 $0.67 Cotton Prices $0.00 $0.62 Price 62.7900 61.9100 -$0.10 $0.52 Volume per Contract Cotton Dec Cotton Mar 17 Sell in millions by March 2017= Standard Deviation of Spot price = Standard Deviation of Future price = Correlation= Optimum Ratio for 100% Optimized Optimized Ratio adjusted Total Contracts Optimum number of contracts (rounded) Transaction on Delivery/Expiration Day Increase/Decrease in Spot Prices Scenarios - Spot Prices Cost from cotton sales + Profit/Loss form Forward Contract Net Payment for the European Goods Units 50,000 cents per lbs 50,000 cents per lbs 4,000,000 4.000% 3.500% 0.80x $0.05 $0.67 Cotton Prices $0.00 $0.62 Price 62.7900 61.9100 -$0.10 $0.52