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Answers to examples

Example 7

Step 3

Initially Sell at 1.3076

Close out: Buy at 1.3150

Difference -0.0074

USD 0.0074 per GBP1 loss

61 × £62,500 × $0.0074 = USD28,213 loss

Settle transaction

Pay supplier ($5,000,000)

Margin returned $61,000

Loss on contract ($28,213)

Total ($4,967,213)

Convert @ spot 1.3100 (£3,791,766)

Margin paid (£46,995)

Transaction value (£3,838,761)

Note: a question this detailed is unlikely but it shows the various stages which
could all be tested individually.

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