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1. Mr. Q expects Euro to appreciate against $ by 7% in a year. Considering the borrowing rate, he calculates that if Euro appreciates against

1. Mr. Q expects Euro to appreciate against $ by 7% in a year.

Considering the borrowing rate, he calculates that if Euro appreciates against $ by 9% he will end up with a break even.

Therefore Mr Q must decide not to do leverage trading (borrow $ to buy Euro) because, considering this break even rate, he will end up with a loss.

A- True

B- False

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