Question

Calculate the expected profit of investor A from speculation using below information:
Current Spot rate: $0.85/Canadian Dollar
Three-month Forward rate: $0.82/Canadian Dollar
A is expecting that spot rate in three months will be $0.84/Canadian Dollar
He wants to buy/sell 10,000 Canadian Dollars to make profit.
a) $200
b) S300
c) -$200
d) -S100
Answer
A​

Answer 1

Answer:

$200 A will buy the 3 month forward at $0.82/Canadian dollar and will sell at $0.84/Canadian dollar Total profit per Canadian