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2) Using currency futures On April 1, a currency trader enters a futures contract to buy the Canadian dollar at USD/CAD= 1.29. The settlement day

2) Using currency futures

On April 1, a currency trader enters a futures contract to buy the Canadian dollar at USD/CAD= 1.29. The settlement day is June 17. On June 17, the spot rate for USD/CAD= 1.28.

Show how the currency trader could generate a profit from speculation and compute the amount of the gain

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