Question
The spot bid-offer rates between Australian dollar and pounds (GBP/AUD) is quoted as 0.5144 - 0.5149. Speculator A expects the exchange rate to be 0.5130
The spot bid-offer rates between Australian dollar and pounds (GBP/AUD) is quoted as 0.5144 - 0.5149. Speculator A expects the exchange rate to be 0.5130 - 0.5140, whereas Speculator B expects the exchange rate to be 0.5150 - 0.5155, in two months from the initial quotes.
a) Based on the expectations of the two speculators, which currency will appreciate and which currency will depreciate from the view of Speculator A, and Speculator B?
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Principles of Finance
Authors: Scott Besley, Eugene F. Brigham
5th edition
1111527369, 978-1111527365
