Question
You`re planning to trip to the US in 3 months and need $50,000. You believe the USD/CAD trend is upward. The current USD/CAD pair is
You`re planning to trip to the US in 3 months and need $50,000. You believe the USD/CAD trend is upward. The current USD/CAD pair is being traded at 1.38. You checked from your FX broker and she quoted you 3 months forwards as 1.41. Your Professor told you that since the oil prices are going up so CAD would be stronger in next few months.
What would be your decision in this situation to select which of the following option. Justify your choice:
Enter in a forward contract to buy $50,000 for USD/CAD for 1.41.
Do not buy anything and wait for 3 months to buy USD 50,000 just before your trip.
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