You expect the value of the Japanese Yen to weaken relative to the U.S. dollar. The Yen futures contract size is 12,500,000 Yen and it is priced at $/100 Yen. You go short in the Dec 2021 futures contract based on your expectations of a weaker Yen and you enter the market at a price of $0.917 per 100 Yen. Then in 2 weeks’ time you liquidate your futures position at a price of $0.921 per 100 Yen. a) Calculate your profit/loss for 1 futures contract in US dollars (ignore brokerage fees). b) All else equal, would an economic recession in Canada cause the USD/CDN exchange rate to increase, decrease, or stay the same?

Essentials Of Investments
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Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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You expect the value of the Japanese Yen to weaken relative to the U.S. dollar. The Yen futures contract size is 12,500,000 Yen and it is priced at $/100 Yen. You go short in the Dec 2021 futures contract based on your expectations of a weaker Yen and you enter the market at a price of $0.917 per 100 Yen. Then in 2 weeks’ time you liquidate your futures position at a price of $0.921 per 100 Yen.

a) Calculate your profit/loss for 1 futures contract in US dollars (ignore brokerage fees).

b) All else equal, would an economic recession in Canada cause the USD/CDN exchange rate to increase, decrease, or stay the same?

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