Question
Dr. Jim decides to do some trade between the Australian dollar and the US dollar. He noticed that in September 2021 Australian dollar futures contract
Dr. Jim decides to do some trade between the Australian dollar and the US dollar. He noticed that in September 2021 Australian dollar futures contract has a price of $1.017 per AUD. He believes that the spot price in September will be $1.015 per AUD.
a) What speculative position (short or long) would he enters to attempt to profit from your beliefs? (Just provide the appropriate position, no need to explain your reason)
b) Calculate his anticipated profits in US Dollar, assuming he takes a position in four contracts and supposes the size of each contract is $ 400,000. (Do not round intermediate calculations. Round your answer to the nearest whole number, show your steps)
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