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Suppose you believe that the pound will depreciate versus the U.S. dollar in the coming six-month period. The current spot rate is $1.30/, and the
Suppose you believe that the pound will depreciate versus the U.S. dollar in the coming six-month period. The current spot rate is $1.30/, and the three-month forward rate is $1.32/. You expect the spot rate to fall to $1.27/ in six months. You can make transactions up to 100,000. Please answer the following questions.
- How should you speculate with forward contracts?
2.Calculate your projected profit based on your decision made in part 1.
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