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The current spot exchange rate is $1.55 per euro and the three months forward rate is $1.527 per euro. You made a forecast and you
The current spot exchange rate is $1.55 per euro and the three months forward rate is $1.527 per euro. You made a forecast and you are certain that the future spot rate in three months will be $1.507 per euro. Assume you would like to buy or sell EUR100,000. Which of the following actions will result in a profit in the forward market and by how much if your forecast is correct?
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