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1. The current spot exchange is $1.45/ and the three-month forward rate is $1.55/. Looking at the economic forecast, you are confident that the spot
1. The current spot exchange is $1.45/ and the three-month forward rate is $1.55/. Looking at the economic forecast, you are confident that the spot exchange rate will be $1.50/ in 3 months. Now, assume you would like to buy or sell 100,000. What actions would take place in the forward market? How much will you make if your prediction is correct? A. Take a long position in a forward euro contract. If correct, you make $5,000 B. Take a long position in a forward euro contract. If correct, you make $10,000 C. Take a short position in a forward euro contract. If correct, you make $10,000 D. Take a short position in a forward euro contract. If correct you will make $5,000
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