Laura Cervantes. Laura Cervantes is a currency speculator and she sells eight June futures contracts for 500,000 pesos at the closing price quoted here: a. What is the value of her position at maturity if the ending spot rate is $0.12007/Ps? b. What is the value of her position at maturity if the ending spot rate is $0.09804/Ps? c. What is the value of her position at maturity if the ending spot rate is $0.11009/Ps? .....
Q: Mr. Saso holds a short position in euros through five March futures contracts, with each contract…
A: Short position means sell now shares and buy them in future and settle the deal. Contract size =…
Q: 3 In February 2021, a company wants to lock in the interest rate that will have to be paid for…
A: Futures Contracts are the financial derivatives which are made on certain assets like stocks, bond…
Q: An FI is planning to hedge its one-year, 100 million Swiss franc (SF)-denominated loan against…
A: Future contract Future contract are traded on exchange. Under the contract the purchaser of future…
Q: The futures price of a commodity such as wheat is $2.50 a bushel. Futures contracts are for 10,000…
A: Given, Futures price = $2.5 a bushel No.of contracts = 10,000 bushels Margin requirement = $2500 per…
Q: Suppose, on a certain day in February, a speculator observes the following prices in the foreign…
A: The following information has been provided in the question: GBP/USD spot=1.6465 March…
Q: A futures trader goes for long position on two (2) CME Australian dollar contracts for AUD100,000…
A: A futures contract is an agreement to buy or sell a particular underlying commodity at a…
Q: On Monday morning, a trader takes a long position in Australian dollars (AUD) future currency…
A: Profit or loss on the currency futures is the difference between the price at which the futures are…
Q: An investor purchases a 197 days to maturity T-Bill in the secondary market. The market interest…
A: To Find: Annual effective yield for investors
Q: On Monday morning, a trader takes a long position in Australian dollars (AUD) future currency…
A: Profit or loss on the currency future is the difference between the price at which the future are…
Q: On 25 July of a particular year, an American firm decided to close its account at an Australian bank…
A: Hedging is a strategy used in risk management and it typically involves derivatives, options, and…
Q: Suppose you borrow RM10,000,000 in the interbank money market at a KLIBOR yield of 6% p.a for aterm…
A: Here, Borrowed Amount is RM10,000,000 KLIBOR is 6%p.a Time Period is 1 month We need to hedge…
Q: In a MNC has peso payables coming due in 90 days, and is certain the the peso will appreciate.…
A: Put option contracts are the contracts which gives the buyer the right to sell an underlying asset.…
Q: a liability of USD 1 million due in December 2021. You have receivables of 10 million Japanese yen…
A: Liability of the company payable in December 2021 is $ 1 Million Receivable due to the Company in…
Q: Croissant, a french company expects to pay US$1,200,000 to a US supplier in late November. It is now…
A: Here, Expected Payment in late November is $1,200,000 July Current Spot Rate is €1 = $1.2200…
Q: Consider the following futures contract for the currency of Brazil, Brazilian real (BRL). Contract…
A: From part a and b, Trader A has bought 100000 units for $0.19 per unit from Trader B Trader A sold…
Q: You expect the value of the Japanese Yen to weaken relative to the U.S. dollar. The Yen futures…
A: Futures contracts help to mitigate or reduce the risk against adverse movement in the price of the…
Q: Financial institutions and other investors are bidding for 91-day T-bill at the last auction of the…
A: Since no interest payble on treausry bills, discount so reccive will be equivelent to interest.…
Q: If a firm is due to be paid in peso in two months, to hedge against exchange rate risk the firm…
A: Position using the futures we have to take the opposite action to the spot
Q: Suppose that you purchase a Treasury bond futures contract at $95 per $100 of face value. What is…
A: The obligation is to buy the bond @$95 at a specified future date
Q: The Mexican peso futures contract is trading at 0.07713 $/MXN. Contract size for the Mexican peso…
A: Futures contract: It is a legal contract to either buy or sell at a fixed price a certain asset or…
Q: A bank customer is going to London in June to buy £ 200000 in new inventory. The current spot and…
A: In this question we need to compute the savings from hedging through futures contract.
Q: Consider a trader who takes a long position in a six-month forward contract on the euro. The forward…
A: Forward rate: $1.75 = €1 Contract size = €62500 Spot exchange rate at the maturity: $1.65 = €1
Q: As a Treasurer of SemCo Ltd you would like to use currency futures contracts to hedge US$40million…
A: The currency future can be used for hedging transaction exposure in the international financial…
Q: n actor needs $300,000 for his vacation on October 1. He is worried about the increasing forex…
A: A contract between buyer and seller to buy or sell an asset at a predetermined price on a future…
Q: Use the futures contract data in the following table to answer the question. Open High Low…
A: Futures contracts are derivative instruments. These instruments are used to hedge the adverse…
Q: An investor wants to lock in the interest rate for a three-month period beginning September 18, 2021…
A: Principal Amount = $100 Million Eurodollar future price = 97.25 3 Month Eurodollar rate = 2.5%
Q: A cotton buyer will be making a purchase of 245,000 pounds of cotton on March 1. The buyer…
A: Futures are used for hedging the cash market so that if prices rises than some loss may be prevented…
Q: Tony Begay at Saguaro Funds. Tony Begay, a currency trader for Chicago-based Saguaro Funds, uses the…
A: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question and…
Q: What is the implied nominal interest rate on a 10-year U.S. T-notes ($100,000)futures contract that…
A: The formula to calculate the equivalent market price is, P=Qp100×F Where, Par value is represented…
Q: You are to pay €360,000 on May 16. Today’s spot rate is $1.10/€. The forward rate is $1.12/€. On…
A: You have asked a question with multipe sub parts. I have addressed the first three sub parts. Please…
Q: 11. In March, Mary shorted 9 currency futures contracts on Yen at 108.88 Yen/$, with maturity in…
A: Given, 1 Dollar = 108.88 Yen At maturity spot 1 Dollar = 110.10 Yen Number of contracts = 9
Q: 1-13 If a speculator observes that the current 3-month forward rate on Swiss francs is 20¢ = 1…
A: If the 3 months forward is trading lower than expected rate after that means currency is…
Q: Tyson Inc. has an account payable in Swedish krona due in 60 days. Which would be an appropriate…
A: To hedge the amount payable in 60 days, the company shall enter int a call option of buying the…
Q: Suppose trader A sells a E-miniS&P 500 indexDecember 2021 expiry (ESZ1)futures contract to trader…
A: Hi, since you have posted multiple question, we will answer the first one, as per the authoring…
Q: Suppose you borrow RM10,000,000 in the interbank money market at a KLIBOR yield of 6% p.a for aterm…
A: Futures are financial derivative contracts that bind the parties to trade an asset at a fixed future…
Q: Going long with Mexican peso futures contract. Soledad McArthur is the chief currency trader at the…
A:
Q: Anna decides to buy a Treasury note futures contract for delivery of $100,000 face amount in June,…
A: Face Value = $100000 Price is quoted as 32nd of the dollar. So, here, Price on June is 110'16.5 is:…
Q: A trader enters into a short cotton forward contract when the forwards price is 50 cents per pound.…
A: Forward contract short position is where under which an investor decides to sell the asset…
Q: Consider the following futures contract for the currency of Brazil, Brazilian real (BRL). Contract…
A: Currency Futures: Futures are contracts that allow the buyer to buy or sell a particular currency at…
Q: Agapito is a speculator who has a futures contract to deliver, on December 31, 1.5 million dollars…
A: Here, Future Contract delivery on 31st December of 1.5 million dollar in exchange of 30 million…
Q: Suppose that the current price of USD/TL rate is 7.18. AL Borsa istanbul there is USD futures…
A: Since you have posted a question with multiple sub-parts, we will solve first three subparts for…
Q: Walmart has taken a yen futures position to hedge a 125 million yen account payable at a yen futures…
A: in this we have to convert Yen amount to dollar amount than calculate what is change.
Q: Consider the following futures contract for the currency of Brazil, Brazilian real (BRL). Contract…
A: Initial margin is the balacne which the trader starts off its margin account Manitenance margin is…
Q: Suppose that Mr, Binda buys a three-month 5,000 contract to buy "commodity-X' at a futures price of…
A: given, number of contract = 5000 initial margin per contract = $70 maintenance margin per contract =…
Q: i. If Amla buys five June Pound futures, and the spot rate at maturity is $1.2685/Pound, what is the…
A: "Since you have posted a question with multiple subparts, we will solve first three subparts for…
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 2 images
- Laura Cervantes. Laura Cervantes is a currency speculator and she sells eight June futures contracts for 500,000 pesos at the closing price quoted here: LOADING... Maturity Open High Low Settle Change Lifetime High Lifetime Low Open Interest March 0.10953 0.10988 0.1093 0.10958 0.11 0.0977 34481 June 0.1079 0.10795 0.10778 0.10773 0.108 0.0973 3405 Sept 0.10615 0.10615 0.1061 0.10573 0.10615 0.0993 1481 . a. What is the value of her position at maturity if the ending spot rate is $0.12005/Ps? b. What is the value of her position at maturity if the ending spot rate is $0.09806/Ps? c. What is the value of her position at maturity if the ending spot rate is $0.11007/Ps?Tony Begay at Saguaro Funds. Tony Begay, a currency trader for Chicago-based Saguaro Funds, uses the following futures quotes, E, on the British pound (£) to speculate on the value of the pound. a. If Tony buys 5 June pound futures, and the spot rate at maturity is $1.3982/£, what is the value of her position? b. If Tony sells 12 March pound futures, and the spot rate at maturity is $1.4558/£, what is the value of her position? c. If Tony buys 3 March pound futures, and the spot rate at maturity is $1.4558/£, what is the value of her position? d. If Tony sells 12 June pound futures, and the spot rate at maturity is $1.3982/£, what is the value of her position? ..... a. If Tony buys 5 June pound futures, and the spot rate at maturity is $1.3982/£, what is the value of her position? The value of Tony's position is $ (Round to the nearest cent. Use a minus sign if value is negative.)Tony Begay at Saguaro Funds. Tony Begay, a currency trader for Chicago-based Saguaro Funds, uses the following futures quotes, , on the British pound (£) to speculate on the value of the pound. a. If Tony buys 5 June pound futures, and the spot rate at maturity is $1.3982 = £1.00, what is the value of her position? b. If Tony sells 12 March pound futures, and the spot rate at maturity is $1.4558 = £1.00, what is the value of her position? c. If Tony buys 3 March pound futures, and the spot rate at maturity is $1.4558 = £1.00, what is the value of her position? d. If Tony sells 12 June pound futures, and the spot rate at maturity is $1.3982 = £1.00, what is the value of her position? a. If Tony buys 5 June pound futures, and the spot rate at maturity is $1.3982/£, what is the value of her position? The value of Tony's position is $. (Round to the nearest cent. Use a minus sign if value is negative.) b. If Tony sells 12 March pound futures, and the spot rate at maturity is $1.4558/£,…
- (a) Suppose a trader takes a position on June 5th 2021, in one September 2021 EURO (EUR) future contract at USD1.3094/EUR. The trader holds the position until the last day of trading when the spot price is USD1.2939/EUR. This will be the final settlement price because of price convergence. The trader has EUR125,000 for this investment. (i) If the trader had a long position and he was a speculator, calculate his profit or loss for the position above. (ii) If the trader had a short position and he was a speculator, calculate his profit or loss for the position above. (iii) If the trader had a long position and he was a hedger, calculate his profit or loss for the position above. (iv) If the trader had a short position and he was a hedger, calculate his profit or loss for the position above. (b) Discuss factors that you would consider in evaluating the political risk associated before making FDI in a foreign country.The Mexican peso futures contract is trading at 0.07713 $/MXN. Contract size for the Mexican peso future is 500,000 pesos. You believe the spot price will be 0.08365 $/MXN at expiration. What speculative position would you enter into to profit from your beliefs? Calculate your anticipated profits assuming you take a position in three contracts. What is the size of your profit or loss if the futures price is indeed an unbiased predictor of the future spot price and this price materializes? Do problem 1 again assuming you believe the spot price will be 0.07061 $/MXN.A speculator enters a futures contract for September delivery (September 19) of £62,500 on February 2. The futures exchange rate is $1.650 per pound. He believes that the spot rate for pounds on September 19 will be $1.700 per pound. The margin requirement is 2 percent. (a) If his expectations are correct, what would be his rate of return on the investment? (b) If the spot rate for pounds on September 19 is 5 percent lower than the futures exchange rate, how much would he lose on the futures speculation? (c) If there is a 65 percent chance that the spot rate for pounds will increase to $1.700 by September 19, would you speculate in the futures market?
- Tony Begay at Saguaro Funds. Tony Begay, a currency trader for Chicago-based Saguaro Funds, uses the following futures quotes on the British pound (£) to speculate on the value of the pound. If Tony buys 5 June pound futures and the spot rate at maturity is $1.3980 = £1.00, what is the value of his position? If Tony sells 12 March pound futures and the spot rate at maturity is $1.4560 = £1.00, what is the value of his position? If Tony buys 3 March pound futures and the spot rate at maturity is $1.4560 = £1.00, what is the value of his position? If Tony sells 12 June pound futures and the spot rate at maturity is $1.3980 = £1.00, what is the value of his position?Consider the following futures contract for the currency of Brazil, Brazilian real (BRL). Contract volume: 100,000 Brazilian reals Initial margin: $1000 Maintenance margin: $800 Day Settle price ($/BRL) 1 0.19 2 0.189 3 0.186 4 0.187 (a) Suppose trader C sells their futures contract to trader B on day 4. What is the profit/loss for all three traders? (Note: assume all trades occur at the settle price in the table).Going long with Mexican peso futures contract. Soledad McArthur is the chief currency trader at the Magna Carta macro hedge fund. She decides on January 15 to go long by buying Mexican peso (MXN) March and June futures currently trading at US$0.11953 and US$0.11790.a. What does it mean to go long with an MXN futures contract? What is Soledad's implied exchange rate scenario?b. Assuming that the initial margin is set at 12.5 percent of the face value of the contract, what is the amount that Soledad has to deposit in the margin account (each contract has a face value of MXN 500,000)?c. If Soledad held the March futures to maturity and the spot exchange rate on that day was US$0.11878 = MXN 1, what would be the cash gain/loss incurred by Magna Carta? Assume that the margin account remains constant during the March futures holding period and that Magna Carta's opportunity cost of capital is 10 percent.d. On January 16, the inflation forecast released by Mexican authorities points to an…
- Cachita Haynes. Cachita Haynes works as a currency speculator for Vatic Capital of Los Angeles. Her latest speculative position is to profit from her expectation that the U.S dollar will rise significantly against the Japanese yen. The current spot rate is 119.00 = $1.00. She must choose between the following 90-day options on the Japanese yen: a. Should Cachita buy a put on yen or a call on yen? b. What is Cachita's breakeven price on the option purchased in part (a)? c. Using your answer from part (a), what is Cachita's gross profit and net profit (including premium) if the spot rate at the end of 90 days is ¥140.00 = $1.00? a. Should Cachita buy a put on yen or a call on yen? (Select the best choice below.) A. Cachita should buy a put on yen to profit from the rise of the dollar (the fall of the yen) OB. Cachita should buy a call on yen to profit from the fall of the dollar (the nse of the yen). OC. Cachita should buy a call on yen to profit from the rise of the dollar (the fall of…Suppose that you purchase a Treasury bond futures contract at $95 per $100 of face value. What is your obligation when you purchase this futures contract? If an FI purchases this contract, in what kind of hedge is it engaged? Assume that the Treasury bond futures price falls to 94. What is your loss or gain? Assume that the Treasury bond futures price rises to 97. Mark your position to market.Consider a trader who takes a long position in a six-month forward contract on the euro. The forward rate is $1.75 = €1.00; the contract size is €62,500. At the maturity of the contract the spot exchange rate is $1.65 = €1.00: O a. The trader has lost $66,287.88. O b. The trader has lost $625. Oc. The trader has lost $6,250. Od. The trader has made $6,250