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international Finance question add references to help me study further John is a currency trader who closely follows the foreign exchange market. He believes that
international Finance question add references to help me study further
John is a currency trader who closely follows the foreign exchange market. He believes that the euro (EUR) will appreciate against the US dollar (USD) in the near future. The current exchange rate for EUR/USD is 1.15. John decides to take a speculative position to profit from this anticipated currency movement. Assuming John decides to go long on EUR/USD with a standard lot size of 100,000 euros, answer the following questions based on this case: A. Calculate the initial investment (in USD) required for John's position if the margin requirement is 2%. (4 Marks) B. Suppose the EUR/USD exchange rate indeed appreciates to 1.17. Calculate John's profit (in USD) if he decides to close his position at this rate. (5 Marks) C. Conversely, if the EUR/USD exchange rate falls to 1.1400, calculate John's loss (in USD) if he decides to close his position at this rate. (5 Marks) D. Describe the factors that influence exchange rate movements. How do interest rates, inflation, government policies, and market sentiment affect exchange rates? (6 Marks) ( Total = 20marks )Step by Step Solution
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