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Joe's Appliances Ltd. (JAL) will be exporting 380 million Yen worth of goods in four months....

Joe's Appliances Ltd. (JAL) will be exporting 380 million Yen worth of goods in four months. In order to make the sale, JAL agreed to be paid in Japanese Yen in four months’ time. The following exchange rate information is available:
Spot price: 95.000 Yen = 1 USD
Four- month forward rate: 95.128 Yen = 1 USD

a)Why might JAL wish to hedge their currency risk how can they do so using a forward contract (briefly explain your answer)?

b)If the spot exchange rate in four months is 1 USD = 95.365 Yen, calculate JAL's profit or loss from hedging.

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