The 3 Month Forward Rate Between British Pound and the Swiss

question 29

Multiple Choice

The 3 month forward rate between British pound and the Swiss franc is £0.5.A speculator predicts the spot rate in three months to be £0.51 and has £1,000,000 for speculation.The speculator should not

• A) get a long position on British pounds
• B) get a short position on Swiss francs
• C) speculate
• D) get a long position on Swiss francs

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