Assume the spot exchange rate today is C$1.02 per $US, while the three-month forward rate is C$1.06 per $US.What will be the profit (loss) for an investor who takes a US $100,000 short position in the forward contract if the spot rate in three months equals 1.05?
A) C$1,000
B) (C$1,000)
C) C$4,000
D) (C$4,000)
Correct Answer:
Verified
Q1: What is the "cost of carry" equivalent
Q2: Profit from a short position in a
Q4: Forward contracts:
A)trade in an open market.
B)establish a
Q5: Which of the following describes a forward
Q6: Magdalena assumes a US$ 2,000 short position
Q7: What condition is necessary to create a
Q8: Profit from a long position in a
Q9: Which of the following carries storage costs?
A)Futures
Q10: A tailor-made contract with a price that
Q11: The six-month forward rate is C$ 1.00
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents