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Your firm is a U.K.-based importer of bicycles. You have placed an order with a Swiss firm for SFr. 1,000,000 worth of bicycles. Payment (in
Your firm is a U.K.-based importer of bicycles. You have placed an order with a Swiss firm for SFr. 1,000,000 worth of bicycles. Payment (in Swiss francs) is due in 12 months. Detail a strategy using futures contracts that will hedge your exchange rate risk. Have an estimate of how many contracts of what type and maturity. Go long 100 12-month Swiss franc futures contracts; and short 50 12-month pound futures contracts. Go short 100 12-month Swiss franc futures contracts; and short 50 12-month pound futures contracts. Go short 100 12-month Swiss franc futures contracts; and long 50 12-month pound futures contracts. none of the options Go long 100 12-month Swiss franc futures contracts; and long 50 12-month pound futures contracts
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