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:

Award

A recognition or prize given for achievement, or in legal contexts, the resolution and determination provided by an arbitrator or judge.

Plaintiff

The person or party who initiates a lawsuit against another in a court of law.

Defendant

A person, business, or organization being charged or sued in a legal court.

Monetary Compensation

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