Question
The current spot exchange rate is $1.55/euro and the three-month forward rate is $1.60/euro. Based on your analysis of the exchange rate, you are confident
The current spot exchange rate is $1.55/euro and the three-month forward rate is $1.60/euro. Based on your analysis of the exchange rate, you are confident that the spot exchange rate will be $1.57/euro in three months. What actions do you need to take to speculate in the forward market? "
| Take a short position in a forward contract on dollars at $1.60/euro. | ||
| Take a long position in a forward contract on euros at $1.60/euro. | ||
| Take a short position in a forward contract on euros at $1.60/euro. | ||
| Buy euros today at the spot rate and sell them in three months at $1.57/euro |
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Introduction to Management Science
Authors: Bernard W. Taylor
11th Edition
132751917, 978-0132751919
