Business, 15.04.2020 02:27 aaliyahrice02

The current spot exchange rate is $1.55/£ and the three-month forward rate is $1.50/£. Based on your analysis of the exchange rate, you are confident that the spot exchange rate will be $1.52/£ in three 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 dollar profit from speculation?
a. Sell £1,000,000 forward for $1.50/£.
b. Buy £1,000,000 forward for $1.50/£.
c. Wait three months, if your forecast is correct buy £1,000,000 at $1.52/£
d. Sell £1,000,000 today at $1.55/£; wait three months, if your forecast is correct buy £1,000,000 back at $1.52/£

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The current spot exchange rate is $1.55/£ and the three-month forward rate is $1.50/£. Based on your...

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