A bank customer is going to London in June to buy £ 200000 in new inventory. The current spot and futures exchange rates are: spot $1.510/£, June futures: $1.625/£. The customer takes a position in June futures to fully hedge her position. In June, the actual FX rate is $1.720/£. How much did she save?

A bank customer is going to London in June to buy £ 200000 in new inventory. The current spot and futures exchange rates are: spot $1.510/£, June futures: $1.625/£. The customer takes a position in June futures to fully hedge her position. In June, the actual FX rate is $1.720/£. How much did she save?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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