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The current spot exchange rate is $1.45/ and the three-month forward rate is $1.55/. Based upon your economic forecast, you are pretty confident that the
The current spot exchange rate is $1.45/ and the three-month forward rate is $1.55/. Based upon your economic forecast, you are pretty confident that the spot exchange rate will be $1.50/ in three months. Assume that you would like to buy or sell 100,000. What actions would you take to speculate in the forward market? How much will you make if your prediction is correct? Multiple Choice Take a short position in a forward. If you're right you will make $15,000. Take a long position in a forward contract on euro. If you're right you will make $5,000 O Take a short position in a forward contract on euro. If you're right you will make $5,000. O Take a long position in a forward contract on euro. If you're right you will make $15,000. O
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