Assuming a current spot exchange rate of $1.24/€ and the sixth month forward rate of $1.19/€, and based on the analysis of exchange rates, there is almost a 100% certainty that the expected spot exchange rate will be $1.22/€ in six months. According to the information stated above, let's consider that a US Company will buy €1,500,000 of textile from an Italian Company.

What is the expected profit from speculation in terms of the dollar?

Answer rating: 100% (QA)

To calculate the expected profit from speculation in terms of the dollar we need to compare the cost ... View the full answer