For the dollar-pound currency pair the one year forward discount for the pound is 1.8%. The spot

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Question:

For the dollar-pound currency pair the one year forward discount for the pound is 1.8%. The spot rate is $1.50 per pound. The expected depreciation of the pound over the year is 0.5%. A speculator buys 10,000 pounds in the forward market. What is the expected profit earned?

a. $160

b. $175

c. $210

d.$195