You are a hotel manager, and are considering four projects that yield different payoffs, depending upon whether there is an economic boom or recession.The potential payoffs and corresponding payoffs are summarized in the following table.
-A risk-loving manager will prefer project
Definitions:
Forward Trade
A financial contract agreement to buy or sell assets at a specified future date and price, used primarily in commodity and currency markets.
Forward Exchange Rate
The agreed upon exchange rate for a currency pair to be traded at a future date, used in hedging and speculation.
Spot Exchange Rate
The current price for which one currency can be exchanged for another.
Foreign Exchange Market
A global marketplace for exchanging national currencies against one another.
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