Question: You have bid for a possible export order that would provide a cash inflow of 1 million in 6 months. The spot exchange rate is

You have bid for a possible export order that would provide a cash inflow of 1 million in 6 months. The spot exchange rate is USD1.27 = EUR1, and the 1-year forward rate is USD1.25 = EUR1. There are two sources of uncertainty: (i) The euro could appreciate or depreciate, and (ii) you may or may not receive the export order. Fill in the following table to illustrate in each case the profits or losses that you would make if you sell 1 million forward by filling in the following table. Assume that the exchange rate in 1 year will be either USD1.17 = EUR1 or USD1.37 = EUR1.

	Total Profit/Loss (in millions)
Spot Rate	Receive Order	Lose Order
USD1.17 = EUR1
USD1.37 = EUR1

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