Alessandro reads in an Italian newspaper that the European economy is heading into a deflationary period, and

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Alessandro reads in an Italian newspaper that the European economy is heading into a deflationary period, and the ECB is using different stimulus strategies to support growth in the Eurozone. At the same time, the US is on a sustained path to growth, with economic and employment data looking strong. He wants to bet that the Euro will fall against the US dollar. What position should Alessandro adopt in the futures market? How much would he win (or lose) from this position if the EUR/USD futures price changed from 1.125 USD/EUR and was closed at 0.99 USD/EUR? (Assume that the contract size is €125,000 (Euro).)

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Fundamentals Of Investing

ISBN: 9781292153988

13th Global Edition

Authors: Scott B. Smart, Lawrence J. Gitman, Michael D. Joehnk

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