Business, 06.05.2020 06:59, 21villalobosjabez

Disney will receive royalties worth 100 million Yen. Disney has decided to enter in a short position future contract on Monday morning in order to hedge the risk yen vs $ exchange rate. Contract size of yen 12.5 million yen. Initial price of the future is 0.000124$/Yen. Future ends at the end of Wednesday. a) How many contracts should Disney take in this future? b) Calculate the daily profits and losses if the future prices are as follows: end Monday 0.00011 $/yen, end Tuesday 0.00013 $/Yen and end Wednesday 0.00017 $/yen. c) Calculate your balance in your bank account at the end of Wednesday if performance bond is 3,000$ and maintenance performance bond 1,500$. d) Disney has also the chance to sign a forward contract with JP Morgan to exchange Yens at 0.00013$/Yen at the same maturity date of the future. What option is better for Disney the future or this forward contact? Why?

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Disney will receive royalties worth 100 million Yen. Disney has decided to enter in a short position...