Assume Perfect Foresight

question 9

Multiple Choice

Assume perfect foresight.The current spot rate is C$2.037 per British pound.The 3-month forward rate is C$2.0383 per British pound.The spot rate in three months will be C$2.04 per British pound.What position must an investor assume in order to make a profit of $17.00?

• A)Pound 13,077 short position
• B)Pound 10,000 long position
• C)Pound 10,000 short position
• D)Pound 13,077 long position

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Definitions:

Freud

Sigmund Freud, an Austrian neurologist best known for developing psychoanalysis, a method through which an analyst unpacks unconscious conflicts based on the free associations, dreams, and fantasies of the patient.

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Sudden Infant Death Syndrome, the unexplained death of a seemingly healthy baby, usually during sleep, without a clear cause even after a thorough investigation.

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A phase of life between adolescence and full-fledged adulthood, characterized by exploration and instability in work, relationships, and personal identity.