A US firm is receiving 8m EUR in 3 months' time. EUR futures are available on the CME with a contract size of 125,000 Euros currently trade at 1.14 EUR/USD. The contract maintenance margin is 2300 USD with an initial margin of 110% of the maintenance margin.

(a) How many contract position should be entered into?

(b) What will be the initial futures cash flow?

Answer rating: 100% (QA)

a Amount to be Hedged 8000000 EUR and Size per Contract 125000 EUR ... View the full answer