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Suppose that the spot exchange rate is $1.5/, that the beta on the forward market return (i.e., buying 1 forward) is 1.5, and that the
Suppose that the spot exchange rate is $1.5/, that the beta on the forward market return (i.e., buying 1 forward) is 1.5, and that the expected dollar rate of return on the market portfolio in excess of the dollar risk-free interest rate is 7%. What is the expected profit or loss on a forward sale of 10,000 using CAPM?
a. | -$750 | |
b. | $1,575 | |
c. | $750 | |
d. | -$1,575 |
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