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Assume that a FOREX trader with a US bank took a short position in 5,000,000, when the $- exchange rate was 1.5500. Soon after the

Assume that a FOREX trader with a US bank took a short position in 5,000,000, when the $- exchange rate was 1.5500. Soon after the exchange rate changed to 1.6100.

Part 1. Is this movement in the exchange rate good from the point of view of the position taken by the trader?

Part 2. Explain why or why not by calculating the profit or the loss, when the position is closed at the new exchange rate.

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