4. You have a 6,000,000 Norwegian Krone receivable. You decide to hedge with a futures contract. You can buy or sell three 2,000,000 Krone futures contracts at $0.0890/NOK.

a.)Assuming you are unhedged, are you concerned that the spot rate will increase or decrease?

b.) To hedge your exposure, would you buy or sell a futures contract?

c.)Assume the price of the Krone increases to $0.0894/NOK by the time you receive the Krone. Calculate the gain/loss on the futures contracts.

d.) Calculate the amount of just the receivable (assuming no futures contracts).

e.) Calculate the net amount you would receive [c + d].