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You need to take to speculate in forward market

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The current exchange rate between pound and euro is £0.78/€ and the six-month forward rate is £0.85/€. According to your exchange rate analysis, you think the spot exchange rate should be £0.80/€ in six 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? What is the expected pound profit from speculation? Draw the forward contract payoff diagram.

Reference no: EM132054741

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