25 Jul WHAT IS THE NET HEDGING RESULT?
a. What position and how many contracts should the financial manager take to hedge against a rise in Show more a. What position and how many contracts should the financial manager take to hedge against a rise in the Euro? Explain why. (hint # contracts = Amount of Euros Hedging / 125000 Euros per contract) always take a position that will give you a futures gain to offset your spot loss in the event of what you want to hedge. Type of Position _____________ Why this Position __________ Number of Contracts_______________________________ b. Suppose in December the spot rate for the Euro rises to $1.3310 and the futures settle rate has risen to $ 1.3326. Calculate the spot opportunity loss or gain for the company and the futures gain or loss. What is the net hedging result? Spot Gain or Loss ____________ Futures Gain or Loss ___________ Net Hedging Result _____________ (Futures Gain or Loss Spot Gain or Loss) Show less
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