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For part a) of this question, I took 28 contracts for the US $ amount of 4,124,236 which I divided by 1.5510 and then again divided by 62,500 which is the contract size and then multiplied with 4/6 as 4 is the length of the loan and 6 is the length of futures. I did 4/6 because we are buying extra 2 months futures, therefore the amount of contracts we require would be less. However, they didn’t multiply it with 4/6 which I don’t understand why they have not done it. Could you please explain why? Thank you.
I think you are confusing currency futures with interest rate futures.
Here, there is not a loan. It is a deal in currency futures.
With currency futures you deal in futures of the amount of the transaction (subject to the nearest contract size). There would be no logic at all in multiplying by anything.
(If it were interest rate futures, then we still would not multiply by 4/6. You multiply by the length of the loan divided by 3 (because interest rate futures are always 3 month futures).)
I do suggest that you watch my free lectures on foreign exchange risk management and on interest rate risk management, because all of this is explained in detail (together with worked examples).
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