A 6-month futures contract on British Pounds is available for a price of $1,3946. The size of each contract is GBP 62,500. You need to settle an outstanding payable of GBP 125,000 and you take a position in the contract at a time when the spot rate is $1.44 and 2.5 months remain for th contract to expire. Assume that the short term interest rate is 1.5% p.a. compounded continuously. Keeping this information in view a. You will acquire a long position in 1 futures contract b. You will take a neutral position in the contract at a total value of approximately 11 cents C You will acquire a long position in 1 futures contracts at a forward value of approximately 5 cents d. You will acquire a long position in 2 futures contracts at a total forward value of approximately 11 cents e. You will acquire a long position in 2 futures contracts at a value of 0

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Exchange Rate Risk

It is the possibility that the value of a currency will fluctuate in the future. In the wake of globalization, business establishments have increasingly ventured into international markets. The volume of international trade has prospered excellently in the near past and is expected to be more affluent in the future. The use of exchange-traded derivative financial instruments has been multi-folded to provide for the requirements of various MNCs and offshore potential investors. Most banks and financial institutions have helped integrate the global economies. Our Government has introduced some bold and extreme measures to fulfil the purpose behind the fiscal, industrial, and monetary policies. The enactment of GST is a huge step towards streamlining the taxation system of the country. Owing to Covid-19, this aspect of corporate risk management has become critical.