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What should he do

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Question - Uzair is speculating in the movement of USD and EUR. Uzair has USD 10 million to begin with, and Uzair must state all profits at the end of any speculation in USD. The spot rate on the euro is USD0.885/EUR, while the 30-days forward rate is USD0.900/EUR. (Note: State all answer in USD)

I. If Uzair believes the euro will continue to slide in value against the U.S. dollar, and he expects the spot rate to be USD0.800/EUR at the end of 30 days, what should he do?

II. If Uzair believes the euro will appreciate in value against the U.S. dollar, and he expects the spot rate to be USD0.950/EUR at the end of 30 days, what should he do?

Reference no: EM133004321

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