Calculate the number of futures contracts that vw needs

Assignment Help Financial Management

Reference no: EM131959668

On January 10, Volkswagen agrees to import auto parts worth $7 million from the U.S.

The parts will be delivered on March 4 and are payable immediately in dollars. VW decides to hedge its dollar position by entering into futures contracts The spot rate is $1.3447/and the March 4th futures price is $1.3502/.

Calculate the number of futures contracts that VW needs.

(Assume a futures contract size of 125,000). On March 4th, the spot rate turns out to be $1.3452/, while the March 4th futures price is $1.3468.

Calculate VW's net euro gain or loss on its futures position.

Compare cost of buy mg $7,000,000 with hedging to the cost of buying $7,000,000 without hedging.

Reference no: EM131959668

Questions Cloud

Create a change-management plan : Create a change-management plan. Put yourself in the position of a consultant making recommendations to the CEO of the organization

How much money was left on-the-table : A company went public on December 1, 2015, with an issue of 5 million shares. The offer price was $30 per share. At the end of the day, the price was $39.

What will be the expected maximum price in light logistics : What will be the expected maximum price in light of the dividend payment logistics ?

Toxic loans around the world weigh on global growth : Beneath the surface of the global financial system lurks a multitrillion-dollar problem that could sap the strength of large economies for years to come.

Calculate the number of futures contracts that vw needs : Compare cost of buy mg $7,000,000 with hedging to the cost of buying $7,000,000 without hedging.Calculate the number of futures contracts that VW needs.

Salvage value-calculate best-case and worst-case npv figures : We are evaluating a project that costs $848,000, has an eight-year life, and has no salvage value. Calculate the best-case and worst-case NPV figures.

What is z-prime stock price : Company Z-prime's earnings and dividends per share are expected to grow by 4% a year. Its growth will stop after year 4. In year 5 and afterward.

Cash balance per bank when performing bank reconciliation : Which of the following would be deducted from the ending cash balance per bank when performing a bank reconciliation?

Apply for based on their budget and the offered terms : What is the mortgage that the couple can apply for based on their budget and the offered terms? With this mortgage and a 20% down payment,

User Account

All Pages