1. You have to make a 90,000,000 payment in Japanese Yen on close of business day, Friday, September 11th. You decide to hedge your risk with the futures contracts. Assume you that you enter into the futures position at a close of day on Tuesday, September 8th. Contract size is 12,500,000 yen. please provide formulas for each part and reasons thank you!

1. Describe the position you decide to enter (long or short).

2. Describe the contract (what month, and what quantity).

3. Document the gain or loss due to marking to market every day that your position is open.

4. What is the total cost in US$ after you have closed out your futures positions, and made your payment?

5. What would have been the total cost in US$, if you had not hedged? Did you benefit from hedging?

Japanese Yen Data Daily Settlements for Japanese Yen Future (FINAL)Trade Date: Wednesday, 09/09/2020 Estimated Prior Day Month Open High Low Last Change Settle Volume Open Interest SEP 20 9438094535 94100 94180 -145 94160 145,486 123,315 OCT 20 9442594595 94160A94240B -145 94210 182 NOV 20 9446094615 94185 94270B -140 94245 94 407 DEC 20 94525 94650 94210 94305A -140 94280 84,797 26,967 JAN 21 -140 94345 0 0 MAR 21 194800B 94425A 94485B -140 94465 0 369 395 - + Daily Settlements for Japanese Yen Futures (FINAL)Trade Date: Friday, 09/11/2020 Estimated Prior Day Month Open High Low Last Change Settle Volume Open Interest SEP 20 9421594295 94095 94200 +5 94240 33,134 36,168 OCT 20 94250 194330B|94160A 194260A +5 94290 275 284 NOV 20 9433094370 94195A 94295A +5 94320 18 319 DEC 20 94310 94405 94215 94305 +5 94355 73,035 115,717 JAN 21 +10 94420 0 0 MAR 21 194540B 94470A 94540B +10 94540 2 369 Spot data: Jul.Day YYYY/MM/DD Wdy USD/JPY 2459101 2020/09/08 Tue 0.0094383 2459102 2020/09/09 Wed 0.0094132 2459103|2020/09/10|Thu|0.0094211 24591042020/09/11 Fri 0.0094191 Japanese Yen Data Daily Settlements for Japanese Yen Future (FINAL)Trade Date: Wednesday, 09/09/2020 Estimated Prior Day Month Open High Low Last Change Settle Volume Open Interest SEP 20 9438094535 94100 94180 -145 94160 145,486 123,315 OCT 20 9442594595 94160A94240B -145 94210 182 NOV 20 9446094615 94185 94270B -140 94245 94 407 DEC 20 94525 94650 94210 94305A -140 94280 84,797 26,967 JAN 21 -140 94345 0 0 MAR 21 194800B 94425A 94485B -140 94465 0 369 395 - + Daily Settlements for Japanese Yen Futures (FINAL)Trade Date: Friday, 09/11/2020 Estimated Prior Day Month Open High Low Last Change Settle Volume Open Interest SEP 20 9421594295 94095 94200 +5 94240 33,134 36,168 OCT 20 94250 194330B|94160A 194260A +5 94290 275 284 NOV 20 9433094370 94195A 94295A +5 94320 18 319 DEC 20 94310 94405 94215 94305 +5 94355 73,035 115,717 JAN 21 +10 94420 0 0 MAR 21 194540B 94470A 94540B +10 94540 2 369 Spot data: Jul.Day YYYY/MM/DD Wdy USD/JPY 2459101 2020/09/08 Tue 0.0094383 2459102 2020/09/09 Wed 0.0094132 2459103|2020/09/10|Thu|0.0094211 24591042020/09/11 Fri 0.0094191