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Answer fast in 5-10 minutes please Question 4 Not yet answered...

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Accounting

Answer fast in 5-10 minutes please
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Question 4 Not yet answered On October 15, a Japanese firm had imported some equipment worth $10 million from a US company. The payment for the same was due on December 15. On October 15, the dollar-yon spot exchange rate was 115.52/5. A bank in Japan quoted a forward rate for December 15 delivery as $117.22/$. The treasurer of the Japanese firm is evaluating the alternative of hedging the exposure through December yen futures traded at IMM. Marked out of 2000 Flag question The December futures were quoted at $ 0.008658 on October 15. The X-futures contract size is $12.5 milion. On December 15, the spot /S rato turned out as 116,68 and December futures price as $ 0.008545. You are required to a. Explain how the Japanese firm can hedge the exposure through W-futures contract. b. Which hedge, forward or futures, has given better result? (show all your computations) c. Is the futures a perfect hedge? Explain

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