ACCA · Question 18.3 · Risk Management

CASE 3: GLOBALBEAN CO

GlobalBean Co is a coffee exporter based in the US (reporting in USD). The company frequently sells coffee beans to European buyers, invoicing in Euros (EUR). GlobalBean expects to receive EUR 500,000 in three months. The company is concerned about foreign exchange risk and interest rate risk on a floating rate loan it holds.

GlobalBean decides to look at currency futures. The standard contract size for EUR futures is EUR 125,000. The tick size is 0.0001 USD/EUR.

Calculate the value of one tick per futures contract in USD.

(Enter your answer as a number to two decimal places, e.g., 10.50)