Do problem 4 again assuming you believe the September 2013 spot price will be $0.07061 per MXN.

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Do problem 4 again assuming you believe the September 2013 spot price will be $0.07061 per MXN.


Data From Problem 4

Using the quotations in Exhibit 7.3 , note that the September 2013 Mexican peso futures contract has a price of $0.07713 per MXN. You believe the spot price in September will be $0.08365 per MXN. What speculative position would you enter into to attempt to profit from your beliefs? Calculate your anticipated profits, assuming you take a position in three contracts. What is the size of your profit (loss) if the futures price is indeed an unbiased predictor of the future spot price and this price materializes?

EXHIBIT 7.3 June Sept Currency Futures Japanese Yen (CME)-12,500,000; $ per 100% 1.0105 1.0110 Canadian

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International Financial Management

ISBN: 9780077861605

7th Edition

Authors: Cheol Eun, Bruce Resnick

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