The Current Spot Exchange Rate Is $1

question 9

Multiple Choice

The current spot exchange rate is $1.45/€ and the three-month forward rate is $1.55/€.Based upon your economic forecast,you are pretty confident that the spot exchange rate will be $1.50/€ in three months.Assume that you would like to buy or sell €100,000.What actions would you take to speculate in the forward market? How much will you make if your prediction is correct?

• A)Take a short position in a forward.If you're right you will make $15,000.
• B)Take a long position in a forward contract on euro.If you're right you will make $5,000.
• C)Take a short position in a forward contract on euro.If you're right you will make $5,000.
• D)Take a long position in a forward contract on euro.If you're right you will make $15,000.

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Definitions:

Workplace Substance Abuse

The misuse of legal or illegal substances by employees in a way that affects their work performance or the safety of the workplace.

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A decrease or deterioration in the execution or outcome of work or duties, often measured against preset standards or expectations.

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