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What is the bet for speculator

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Two speculators (Jan and John) in Canada sign a 3-month forward contract on US $1million. Jan is taking the long position and John is taking the short position. The forward exchange rate is $1.30 (Canadian dollar) per US dollar. Currently, 1 US dollar equals to 1.28 Canadian Dollar. 3-month later, the exchange rate becomes $1.27 (Canadian dollar) per US dollar. Please describe physical delivery and cash settlement in this forward contract and specify whether the underlying asset is exchanged and cash flows to each speculator. What is the bet for each speculator? Please explain

Reference no: EM132998808

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