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

  1. 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 IMM futures contracts. The spot rate is $1.3447/€ and the March futures price is $1.3502. On March 4, the spot rate turns out to be $1.3452/€, while the March futures price is $1.3468/€. Calculate VW’s net euro gain or loss on its futures position.

    $13,850 loss

    $13,850 gain

    $17,850 loss

    $17,850 gain
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Answer: 17,850 Loss.

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