Assume that on November 1, the spot rate of the British pound was $1.58 and the price

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Assume that on November 1, the spot rate of the British pound was $1.58 and the price on a December futures contract was $1.59. Assume that the pound depreciated during November so that by November 30 it was worth $1.51.

a. What do you think happened to the futures price over the month of November? Why?

b. If you had known that this would occur, would you have purchased or sold a December futures contract in pounds on November 1? Explain.

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International financial management

ISBN: 978-0324593471

9th Edition

Authors: Jeff Madura

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Question Posted: Jun 04, 2012 07:55 AM

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Assume that on November 1, the spot rate of the British pound was $1.58 and the price

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a The December futures price would have decreased because it reflect...View the full answer

International financial management

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