You have to make a $90,000,000$ payment in Japanese Yen on the close of business

day, Friday, January $26.$ You decide to hedge your risk with futures contracts.

Assume that you enter into the futures position at the close of day on Tuesday,

January $23.$ Futures and spot data are provided in the file HW$1\_$data.doc. The

contract size is $12,500,000$ yen.

a$.$ Describe the position you decide to enter $($long or short$).$

b$.$ Describe the contract $($what month, and what quantity$).$

c$.$ Document the gain or loss due to marking to market every day that your position

is open.

d$.$ What is the total cost in US$ after you have closed out your futures positions, and

made your payment?

e$.$ What would have been the total cost in US$$,$ if you had not hedged? Did you

benefit from hedging?