The senior management has allocated you 400,000,000 units of each currency as the initial balance for your speculation strategy if you are speculating on AUD, GBP, CAD, EUR, NZD, CHF or USD and 25,000,000,000 units if you are speculating on JPY. For instance, if you are speculating on AUD/EUR and AUD/GBP and decided to short the EUR and long GBP, then you have been allocated 400,000,000 EURs and 400,000,000 AUDs for this purpose. The corresponding long/short position should be calculated using bid/ask rates provided in Table 1. Please note that you must speculate on two currency pairs based on your stage 1 market view. You must then take long and short positions as of 1^st August 2021 in the respective currencies in accordance with your market view as a price taker. In the report, you are requested to provide a brief summary of your market views before demonstrating your long/short speculation strategy. [2.5 Marks]. These long and short positions will constitute your portfolio's current opening position. Based on your initial position you must choose the most appropriate quotations among Bank A, B and C in Table 1, and estimate the opening AUD value of your portfolio using the corresponding mid rates and update your position summary table below with your speculative position [2.5 Marks]. Mid rate = (bid rate + ask rate)/2

ps. we have estimated AUD would appreciate relative to GBP and the AUD would also be expected to appreciate against USD.

here's an example of this question:

Suppose you do the following:

Buy 2m AUD at AUD/EUR = 0.8620

Sell 5m AUD at AUD/EUR = 0.8625

Sell 3m AUD at AUD/EUR = 0.8630

Net position = short 6m AUD

To square this position, you would need to buy 6m AUD.The rate you obtain will determine the profit or loss.

\fThese cash flows can be shown as follows: AUD EUR Rates AUD/EUR 2,000,000 -1,724,000 0.8620 -5,000,000 4,312,500 0.8625 -3,000,000 2,589,000 0.8630 6,000,000 -5,172,000 0.8620 0 5,500Q1 - Profit /Loss Calculation - EXAMPLE Profit/Loss on your FX portfolio must be reported in Australian dollars (AUD P/L = Ending/Expected Position (AUD) - Opening Position (AUD) Example Assume: AUD/EUR 0.6070 AUD/EUR (Mid rate): 0.6071 Opening Position Position in Net (current) AUD (Current) Net Net Position Change in Currency Position in AUD Position (Bid/ask rate) (Mid rate) Trades (Expected (Expected) (AUD) AUD 658,978,583.20 658,978,583.20 CAD CHF EUR -400,000,000 -658870037.9 GBP JPY NZD USD Net Position (AUD) 108,545.31