The spot rate for the french franc is 01250 and the, Ask an Expert

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The spot rate for the French franc is 0.1250 and the three-month forward rate is $0.1260. Your company is prepared to speculate that the French franc that the French franc will move to $0.1400 by the end of three months.

(a) Are the quotations given direct or indirect Paris quotations?

(b) How would the speculation be undertaken using the spot market only?

(d) If your company were prepared to put $1 million at risk on the deal, what would the profit outturns be if expectations were met? Ignore all interest rate implications.

(e) How would your answer above (d) differ were you to take into account interest rate implications?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92839805

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