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Suppose that the spot exchange rate is $1.55/, that the beta on a forward contract to buy pounds with dollars is 1.5, and that the

Suppose that the spot exchange rate is $1.55/, that the beta on a forward contract to buy pounds with dollars is 1.5, and that the expected excess dollar rate of return on the market portfolio is 7%. What is the expected profit or loss on a forward purchase of 1,000,000? Explain how this can be an equilibrium.

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