Today is April 1 Korea 's LG Electronics (LG) expects to receive 160,000,000 from a Japanese customer in 60 days The current spot exchange rate is Won0 1250 The current futures price for June delivery is Won0 1200 The size of a yen futures contract is 10,000,000 How many futures contracts should LG...

LG will need 160 million10 millioncontract 16 contracts to cover their forward exposure Si ...

Today is April 1. Korea's LG Electronics (LG) expects to receive 160,000,000 from a Japanese customer in

Question:

Today is April 1. Korea's LG Electronics (LG) expects to receive ¥160,000,000 from a Japanese customer in 60 days. The current spot is Won0.1250/¥. The current futures price for June delivery is Won0.1200/¥. The size of a yen futures contract is ¥10,000,000. How many futures contracts should LG buy or sell in order to hedge its forward obligation? What is LG's net profit or loss if the spot rate in 60 days is Won0.1400/¥?
Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...