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You sold 5 contracts of September Euro (€) futures at 1.15$/€ on June 1. Each contract of futures is €125,000. The contract is marking to market on a daily basis as the price changes.

If the exchange rate falls to 1.12$/€ the next day on June 2, what is your cash flow at the end of business on the next day? (Please clearly indicate cash inflow or outflow and the exact amount.)

If the exchange rate rebounds to 1.16$/€ on June 3, how much will you receive that day? (Please clearly indicate cash inflow or outflow and the exact amount.)

What is your net gain/loss if you decide to close your position on June 3?

Please show clear work

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92714715

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