A bank customer will be going to London in June to purchase £100,000 in new inventory. The current spot and futures exchange rates are as follows:
|
Exchange Rate (Dollars/Pound) |
|
|
Period |
Rate |
|
Spot |
1.5342 |
|
March |
1.6212 |
|
June |
1.6901 |
|
September |
1.7549 |
|
December |
1.8416 |
The customer enters into a position in June futures to fully hedge her position. When June arrives, the actual exchange rate is $1.725 per pound. How much did she save?