Jos Ballini is a currency trader and speculator for Bozano Simonsen, one of the largest investment banking

José Ballini is a currency trader and speculator for Bozano Simonsen, one of the largest investment banking firms in São Paulo. The current spot rate is \(\mathrm{R} \$ 1.7800 / \$\), and the 360 -day forward rate is \(\mathrm{R} \$ 1.8860 / \$\). José believes the Brazilian real will actually appreciate against the U.S. dollar in the coming year.

a. What should he do with the R \(\$ 500,000\) he has to take a position with?

b. If the spot rate at the end of 360 days is \(\mathrm{R} \$ 1.4688 / \$\), what was José's profit and rate of return on his investment in part (a)?

c. If the spot rate at the end of 360 days is R \(\$ 1.9800 / \mathrm{S}\), what was José's profit and rate of return on his investment in part (a)?