You recently sold some goods to an importer in Switzerland and, during the negotiations, you agreed to invoice the goods in francs, knowing that you will need to convert the francs to dollars upon receipt. The current exchange rate is $0.60 per franc, and the invoice will be for 375,000 francs. Payment is due in 60 days. You decide to hedge your exposure using futures contracts.

1. How many futures contracts will you need? Show your work.
2. Will you create a buy hedge or a sell hedge? Why?
3. What will your futures contract gain or loss be if you transacted the future contracts at the futures rate of $0.63, while the futures rate decreases to $0.61. Show your work.