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Unit Costs of EUROs and USDs Please help with the following problem Please provide step by step calculations A US importer is concerned about the appreciation of Euro against USD due to Euro payables of EUR10,000,000 in three months To hedge (protect himself/herself) the position, exporter decides to use futures markets Currently, CME (Chicago Mercantile Exchange) EURO contracts (125,000 each) are traded at USD10814 The spot rate is EUR/USD10751-0756 (USDs per EURO) Suppose the exporter takes an equal futures position to its cash market position (EUR10m) at $10814 Provided that futures contract price and spot rates are $11250/Euro and $10935/Euro respectively when the hedge is liquidated, what should be the unit cost of EURO for the US importer in USD terms
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