Question
For the dollar-pound currency pair the one year forward discount for the pound is 1.8%. The spot rate is $1.50 per pound. The expected depreciation
For the dollar-pound currency pair the one year forward discount for the pound is 1.8%. The spot rate is $1.50 per pound. The expected depreciation of the pound over the year is 0.5%. A speculator buys 10,000 pounds in the forward market. What is the expected profit earned?
a. $160
b. $175
c. $210
d.$195
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International financial management
Authors: Jeff Madura
9th Edition
978-0324593495, 324568207, 324568193, 032459349X, 9780324568202, 9780324568196, 978-0324593471
