How would the speculation be arranged using forward markets

Reference no: EM131291235

The spot rate for the Danish krone is USD0.1500 and the three-month forward rate is USD0.1505. Your company is prepared to speculate that the Danish krone will move to USD0.1650 by the end of three months.

(a) Are the quotations given direct or indirect Copenhagen quotations?

(b) How would the speculation be undertaken using the spot market only?

(d) If your company were prepared to put USD1m at risk on the deal, what would the profit outturns be if expectations were met? Ignore all interest rate implications.

(e) How would your answer to (d) above differ were you to take into account interest rate implicat

Reference no: EM131291235

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