A bank customer will be going to London in June to purchase GBP 100,000 in new inventory. The current spot futures exchange rates are as follow: Exchange Rates (Dollar/pound) Period Rate Spot 1.5342 March 1.6212 June 1.6901 September 1.7549 December 1.8416 The customer enters into a position in June futures to fully hedge her position. When June arrives, the actual exchange rate is USD 1.725 per pound. How much did she save?

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Answer 1

Question

Chapter 14, Problem 23AP

To determine

A bank customer will be going to London in June to purchase GBP 100,000 in new inventory. The current spot futures exchange rates are as follow:

Exchange Rates (Dollar/pound)
Period Rate
Spot 1.5342
March 1.6212
June 1.6901
September 1.7549
December 1.8416

The customer enters into a position in June futures to fully hedge her position. When June arrives, the actual exchange rate is USD 1.725 per pound. How much did she save?

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Answer 2

Question

Chapter 14, Problem 23AP

To determine

A bank customer will be going to London in June to purchase GBP 100,000 in new inventory. The current spot futures exchange rates are as follow:

Exchange Rates (Dollar/pound)
Period Rate
Spot 1.5342
March 1.6212
June 1.6901
September 1.7549
December 1.8416

The customer enters into a position in June futures to fully hedge her position. When June arrives, the actual exchange rate is USD 1.725 per pound. How much did she save?

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Answer 3

Question

Chapter 14, Problem 23AP

To determine

A bank customer will be going to London in June to purchase GBP 100,000 in new inventory. The current spot futures exchange rates are as follow:

Exchange Rates (Dollar/pound)
Period Rate
Spot 1.5342
March 1.6212
June 1.6901
September 1.7549
December 1.8416

The customer enters into a position in June futures to fully hedge her position. When June arrives, the actual exchange rate is USD 1.725 per pound. How much did she save?

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Answer 4

Question

Chapter 14, Problem 23AP

To determine

A bank customer will be going to London in June to purchase GBP 100,000 in new inventory. The current spot futures exchange rates are as follow:

Exchange Rates (Dollar/pound)
Period Rate
Spot 1.5342
March 1.6212
June 1.6901
September 1.7549
December 1.8416

The customer enters into a position in June futures to fully hedge her position. When June arrives, the actual exchange rate is USD 1.725 per pound. How much did she save?

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Answer 5

Chapter 14, Problem 23AP

To determine

A bank customer will be going to London in June to purchase GBP 100,000 in new inventory. The current spot futures exchange rates are as follow:

Exchange Rates (Dollar/pound)
Period Rate
Spot 1.5342
March 1.6212
June 1.6901
September 1.7549
December 1.8416

The customer enters into a position in June futures to fully hedge her position. When June arrives, the actual exchange rate is USD 1.725 per pound. How much did she save?

Answer 6

Chapter 14, Problem 23AP

To determine

A bank customer will be going to London in June to purchase GBP 100,000 in new inventory. The current spot futures exchange rates are as follow:

Exchange Rates (Dollar/pound)
Period Rate
Spot 1.5342
March 1.6212
June 1.6901
September 1.7549
December 1.8416

The customer enters into a position in June futures to fully hedge her position. When June arrives, the actual exchange rate is USD 1.725 per pound. How much did she save?

Answer 7

Chapter 14, Problem 23AP

To determine

A bank customer will be going to London in June to purchase GBP 100,000 in new inventory. The current spot futures exchange rates are as follow:

Exchange Rates (Dollar/pound)
Period Rate
Spot 1.5342
March 1.6212
June 1.6901
September 1.7549
December 1.8416

The customer enters into a position in June futures to fully hedge her position. When June arrives, the actual exchange rate is USD 1.725 per pound. How much did she save?

Answer 8

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Answer 9

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Answer 10

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Answer 11

Ch. 14 - Prob. 1LO Ch. 14 - Prob. 2LO Ch. 14 - Prob. 3LO Ch. 14 - Prob. 4LO Ch. 14 - Prob. 5LO Ch. 14 - Prob. 6LO Ch. 14 - Prob. 1Q Ch. 14 - Prob. 2Q Ch. 14 - Prob. 3Q Ch. 14 - Prob. 4Q

Exchange Rates (Dollar/pound)
Period	Rate
Spot	1.5342
March	1.6212
June	1.6901
September	1.7549
December	1.8416

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Chapter 14 Solutions