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Assume you believe that Purchasing Power Parity (PPP) exists between the US Dollar (USD) and the Nigerian Naira (NGN) You expect that inflation Nigeria will
Assume you believe that Purchasing Power Parity (PPP) exists between the US Dollar (USD) and the Nigerian Naira (NGN) You expect that inflation Nigeria will be 28% over the next year; you expect US inflation to be 4% over the same period. Today the spot rate of the Nigerian Nana is $ 0063, NGN and a 1 year futures contract available for Nigerian Naira (covering NGN10 million) is available for $0044/NGN BUY or SELL of futures contract on Naira? And, once you did what would you expected profit be from your market action
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