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blsea [12.9K]
3 years ago
14

The current spot exchange rate is $1.55/£ and the three-month forward rate is $1.50/£. Based on your analysis of the exchange ra

te, you are confident that the spot exchange rate will be $1.52/£ in three months. Assume that you would like to buy or sell £1,000,000. What actions do you need to take to speculate in the forward market? What is the expected dollar profit from speculation?
a. Sell £1,000,000 forward for $1.50/£.
b. Buy £1,000,000 forward for $1.50/£.
c. Wait three months, if your forecast is correct buy £1,000,000 at $1.52/£
d. Sell £1,000,000 today at $1.55/£; wait three months, if your forecast is correct buy £1,000,000 back at $1.52/£
Business
1 answer:
Misha Larkins [42]3 years ago
4 0

Answer:

b. Buy £1,000,000 forward for $1.50/£.

Explanation:

Let's say for instance, we agree to make purchase of €1,000,000 and then forward for $1.50/€ and we assume that the price turns out to become $1.62/€ in three months time, the expected profit will be $12,000 = €1,000,000 ($1.62 - $1.50)As we can see, answer d looks convincing from an accounting standpoint, but it is wrong because the question asks us to make money with a forward contract, not by holding a particular spot. The correct option should be option b.

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Apple hosts a large number of forums, which become customers' primary source of product information after warranties expire and
ser-zykov [4K]

Answer:

D. online communities

Explanation:

-Social networks are sites where people can share information and communicate.

-Microblogs are a type of online blog that has short entries.

-Niche networks are networks that focus on a specific group of people.

-Online communities are groups of people that interact on the internet through forums, chat rooms to get information about specific topics.

According to this, these forums are an example of online communities.

4 0
4 years ago
Someone who provides you with recommendations related to your money and investments would be called a...
IgorC [24]
Investor is the answer. Hope this helps!
3 0
4 years ago
On January 1, $5,000,000, 10-year, 10% bonds were issued at $5,200,000. Interest is paid annually each January 1. The straight-l
Mnenie [13.5K]

Answer:

$20,000 premium is amortized at the end of the first year.

Explanation:

Straight line amortization:

premium amortized = Premium / number of years

                                 = ($5,200,000 - $5,000,000) / 10 years

                                 = $200,000 premium / 10 years

                                 = $20,000

Therefore, $20,000 premium is amortized at the end of the first year.

3 0
3 years ago
The total demand for money is the sum of the transactions demand plus the ____________ demand for money.
Mkey [24]

Answer:

precautionary and speculative

Explanation:

Aggregating the transactional, precautionary and speculative demand for money, we get the total demand for money. This is sometimes known as the liquidity  preference curve, and is inversely related to the rate of interest.

Total demand for money=Transactions demand+precautionary and speculative demand for the money

Therefore, the answer to the question is precautionary and speculative

5 0
4 years ago
Determine the type of bias involved. A local businessman is proposing a new sports stadium in a metropolitan area. He puts up bi
Rus_ich [418]

Answer: This is called <u>Self-interest bias</u>.

Explanation:

When someone is using this type of bias they are doing it for their own self interest. They will use all information gathered to use the information that will benefit themselves and their interests. This can be considered unethical in some types of businesses. The person using self interest bias will try to blame others for any failures that they may have. They may also refuse to take personal responsibility in any situation.

These  are three other types of bias;

  1. Selection bias
  2. Information bias
  3. Confounding

3 0
4 years ago
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