Question
A currency speculator expects the spot rate of Euros to change from $1.00 to $0.80 in six months. Assume the speculator has access to credit
A currency speculator expects the spot rate of Euros to change from $1.00 to $0.80 in six months. Assume the speculator has access to credit lines of $10,000,000 in the
US and E 10,000,000 in Europe. The annual borrowing & lending rates are 6 percent in US and 8 percent in Europe.
If his forecast turns out be to true, at the end of the six month period, the speculators expected profit (in US $) will be:
C. $1,980,000
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National Finance A Chinese Perspective
Authors: Yunxian Chen, Heming Yong
1st Edition
9813360917, 978-9813360914
