solution
solution.
The current spot exchange rate is $1.55/€ and the three-month forward rate is $1.50/€. Based on your analysis of the exchange rate, 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?
Group of answer choices
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Order Paper NowSell €1,000,000 today at $1.55/€; wait three months, if your forecast is correct buy €1,000,000 at $1.52/€.
None of the other answers
Sell €1,000,000 today at the spot rate, buy €1,000,000 forward.
Buy €1,000,000 today at the spot rate, sell €1,000,000 forward.
Wait three months, if your forecast is correct buy €1,000,000 at $1.52/€.
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