Question
Company X in Great Britain enters into a forward exchange contract with Company Y in Greece, to be settled in six months. While the
Company X in Great Britain enters into a forward exchange contract with Company Y in Greece, to be settled in six months. While the agreed upon forward rate (based on today's spot rate) is 1 euro per 0.75 pounds, if in six months the actual spot rate is 1 euro per 0.77 pounds, this move will favor Company: X because the pound appreciated versus the euro. X because the euro appreciated versus the pound. Y because the pound appreciated versus the euro. Y because the euro appreciated versus the pound.
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