Suppose you are a US investor who is hurt when the dollar depreciates. Specifically, assume that your earnings decrease by $200,000 for every $0.05 increase in the dollar/pound exchange rate.

 If the pound futures contract on the Chicago Mercantile Exchange calls for the delivery of 62,500 pounds, how many contacts will you need to enter to cover? 

Will you take the long or short side of the contracts?

Answer rating: 100% (QA)

Considering that your profit decline by 200000 for each 005 expansion in the dollarpound conversion ... View the full answer