You work as a broker for a US company that imports European foods into the...
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You work as a broker for a US company that imports European foods into the US. You just signed a deal with an Italian producer of premium olive oil. Under the terms of the contract, in three months you will receive 40,000 liters of olive oil in exchange for 100,000 euros. You are going to sell the entire shipment of olive oil to Fresh Foods Markets at $3.2/liter. All cash flows occur in exactly three months
A. Using Excel plot your profits in three months from the deal as a function of the spot exchange rate in three months, for exchange rates from $0.9/ to $1.35/ (Spot Exchange rate, $$/1, on your X-axis, profit in $$ on your Y-axis) . Label this line Unhedged Profits.
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