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dear sir, to find out the no of contract needed. is we want to hedge against dollar payment. ($5m)
The futures contract are in pounds. is it okay if we do this suppose contract are 1M pounds
$5m/todays spot rate futher divide by 1M pounds to get the no of contract as oppose to $5m/ todays future price further divide by 1M pounds to get the no of contracts?Given that any gain or loss on the futures is based on the futures prices, it makes more sense to calculate the number of contracts after converting at the current futures price. If you do convert at the current spot rate ups are not going to lose many (if any )marks, but it is better to convert using the futures price.
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