A fellow manager in DFT plc has just been reading about George Soros’s £10 billion short on the UK pound on 16 September 1992 (a short strategy profits from a fall) and made a profit of £1.1 billion. The manager then argues that the finance department of DFT should do the same.

a Explain such actions in terms of leading and lagging.

b Consider whether or not such a policy would be wise.