Question 40

A currency trader believes the British pound will weaken against the U.S. dollar over the next six months and would like to speculate on his view with a value of £375,000. He could sell pounds in the spot market at 1.52$/£ (i.e., 1.52 dollars per pound) or sell six futures contracts at 1.48$/£ with an initial margin of $15,000. What is the profit (loss) from the futures position if the spot rate in six months is 1.45$/£?