How will the trade conduct the transaction

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Reference no: EM131989358

Speculative forward position: It is February 2, 2017. The 6 month forward rate for $/A$ today is $0.7622. Suppose the $/A$ trader has just heard an economic forecast from the bank's head economist that causes him to believe that the Australian dollar will likely depreciate in value against the USD to a level less than the forward rate over the next 6 months. On August 2, 2017, the $/A$ is $0.7608.

How will the trade conduct the transaction?

What's his/her profit (loss)? Suppose the trader engage in one futures contract: Size: 100,000 Australian dollar) ?

Reference no: EM131989358

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