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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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Answer:

Following are the solution to this question:

Explanation:

In all the given choices some of the data is missing so, its correct entry can be defined as follows  

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8 0
3 years ago
Multinational market regions include countries that seek mutual economic benefit from____________. A. reducing cooperative agree
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Answer: Option C

                                     

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3 years ago
Terrel is designing and maintaining a web page for a local company. In which career pathways would Terrel be involved? Programmi
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<h3>What is a career pathway?</h3>

A Career Pathway is defined as the set of intentional and related or planned education programs and supportive services.

A career pathway is an institution of a workforce that operates a sequence of structured knowledge to accomplish various accomplishments' or skills.

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In the given, case, Terrel involves the understanding of Programming and software development to be capable to develop and support a web page for the local company.

Therefore, options A and C are correct.

To learn more about the career pathways, refer to:

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5 0
2 years ago
A company has three product lines, one of which reflects the following results:
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Answer:

The correct answer is C.

Explanation:

Giving the following information:

Sales $215,000

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4 0
3 years ago
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Answer:

True

Explanation:

In psychology, the term cognitive dissonance refers to the <u>stress (psychological) that one person experiences when they hold two opposite values or ideas, also, they experience cognitive dissonance when they participate in an action that goes against their values or ideas</u>, creating stress.

In this example, a person took their elderly parent to a Gerontology clinic, after leaving they wonder if they made the right choice. We can see that <u>they might have done something that went against their values or ideas (taking parents to a Gerontology clinic) and the person is starting to wonder if what they did was right and is experiencing psychological distress.</u> Therefore, this is an example of cognitive dissonance.

8 0
3 years ago
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