Question: 1.State the formula. That is the statement with the variables included. 2. Substitute into the formula. Convert the variables to constants/numbers. 3. Solve the problem.

1.State the formula. That is the statement with the variables included.

2. Substitute into the formula. Convert the variables to constants/numbers.

3. Solve the problem.

Compute the solution of the problem assuming speculation of the investor

We have the following information. The spot exchange rates now and expected in a year

from now between the South African rand and the Mali West African franc (CFA) is .02

and .025 S. A. rand per CFA. The forward rate between the two currencies is .225 S.A.rand

per CFA. How would we speculate in the spot markets and in the forward one to attain a

profit? Presuppose, we have the equivalent of 10 million rand.

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