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4.Estimate the expected profit or loss if an investor sold a one-year futures contract today on one million Canadian dollars and settled this contract on

4.Estimate the expected profit or loss if an investor sold a one-year futures contract today on one million Canadian dollars and settled this contract on the settlement date.Information for the contract is as follows:

PPP exists

Canadian inflation next year expected to be 3 percent

United States inflation next year expected to be 8 percent

Spot rate for Canadian dollar is $0.90

One year futures contract for Canadian dollar is priced at $0.87

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