Question
1 A. Assume that you are the long party, and you set the forward rate for gold at 2,082 per oz. If the rate is
1
A. Assume that you are the long party, and you set the forward rate for gold at 2,082 per oz. If the rate is 1,892 what is your gain/loss?
B. Assume that you are the long party, and you set the forward rate for gold at 1,824 per oz. If the rate is 2,174 what is your gain/loss?
C. Consider the law of one price, which states that when all market frictions are considered, an asset will have the same price regardless of geographical location or exchange. By that if the price of an oz of gold is 1,864 in the US, what is its price in dollars in Mexico?
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