Can someone do this homework?

Futures and Options

Homework 1

Due: Wednesday, February 11, 2015

1. Do the following exercises from the book:

Chapter 2: Exercise 2.28, 2.29

2. You have to make a 90,000,000 payment in Japanese Yen on close of business day, Friday, January 23d. You decide to hedge your risk with the futures contracts. Assume you that you enter into the futures position at a close of day on Tuesday, January 20th. Futures and spot data are provided in the file HW1_data.doc.

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?

f. Repeat steps a) – e) assuming that you expect a payment of 900,000 British pounds on close of business day, Friday, January 23d. Assume you that you enter into the futures position at a close of day on Tuesday, January 20th. Futures and spot data are provided in the file HW1_data.doc.