EBK ECONOMICS OF MONEY, BANKING AND FIN
EBK ECONOMICS OF MONEY, BANKING AND FIN
5th Edition
ISBN: 8220106799727
Author: Mishkin
Publisher: PEARSON
Question
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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
    Spot1.5342
    March1.6212
    June1.6901
    September1.7549
    December1.8416

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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