Consider the following: Assume the current market futures price is 1.66 A$/$.You borrow 167,000 A$ and convert the proceeds to U.S.dollars and invest them in the U.S.at the risk-free rate.You simultaneously enter a contract to purchase 170,340 A$ at the current futures prices (maturity of 1 year).What would be your profit (loss)
A)Profit of 630 A$
B)Loss of 2300 A$
C)Profit of 2300 A$
D)Loss of 630 A$

Question

Consider the following:  Assume the current market futures price is 1.66 A$/$.You borrow 167,000 A$ and convert the proceeds to U.S.dollars and invest them in the U.S.at the risk-free rate.You simultaneously enter a contract to purchase 170,340 A$ at the current futures prices (maturity of 1 year).What would be your profit (loss)
A)Profit of 630 A$ 
B)Loss of 2300 A$ 
C)Profit of 2300 A$ 
D)Loss of 630 A$

Quizplus · Accepted Answer

[A$167,000/1.67 × 1.04 × 1.66] - (A$167,000 × 1.03) = A$630.

Consider the Following: Assume the Current Market Futures Price