Subject: International Financial Management

Please explain in detail. Thank you in advance:)

(a) Suppose a trader takes a position on June 5th 2021, in one September 2021 EURO (EUR) future contract at USD1.3094/EUR. The trader holds the position until the last day of trading when the spot price is USD1.2939/EUR. This will be the final settlement price because of price convergence. The trader has EUR125,000 for this investment. Discuss factors that you would consider in evaluating the political risk associated before making FDI in a foreign country. (15 marks)