Question

Suppose that Panasonic buys a Swiss franc futures contract (contract size is SFr 125,000) at a price of $0.83. If the spot rate for the Swiss franc at the date of settlement is SFr 1 = $0.8250, what is Panasonic’s gain or loss on this contract?

Answer 1

$ -625

Step-by-step explanation:

Contract size is SFr 125,000

Price of $0.83.

SFr 1 = $0.8250

Swiss franc futures

Contract size = SFr 125,000

Futures price = $ 0.83 / SFr

Sn = $ 0.8250 / SFr at settlement

Gains or Losses = (Sn – F) (contract size )

= (0.8250 – 0.83) (125,000)

=-0.005×$125,000

= $ -625

Therefore the Panasonic’s loss on this contract is $-625