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1. Your company decides to open a futures contract to avoid any risks. The premium for the contract is 2%. The currency rate today is $1=0.8724 of the other currency. If the other currency exchanges at a rate of $1 = 0.8927 in 90 days, is the other currency trading at a premium or a discount to the USDollar?

2. If the contract stated in question 5 is exercised (paid) at 90 days at $1=0.8927, then what is the gross profit your company will make on the sale of 100 units?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92744194

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