Question: The current spot exchange rate is $1.4744/ and the six-month forward rate is $1.4746/. Suppose the $/ trader has just heard that the dollar will

The current spot exchange rate is $1.4744/ and the six-month forward

The current spot exchange rate is $1.4744/ and the six-month forward rate is $1.4746/. Suppose the $/ trader has just heard that the dollar will likely to appreciate in value against the euro in next six months and exchange rate will be $1.4741/ in six months. Assume that you would like to sell or buy 1,000,000. What actions will you take to make a speculation in the forward market? Calculate the expected dollar profit from making this speculation? Explain why you take this action in detail. (Please show all calculations) The current spot exchange rate is $1.4744/ and the six-month forward rate is $1.4746/. Suppose the $/ trader has just heard that the dollar will likely to appreciate in value against the euro in next six months and exchange rate will be $1.4741/ in six months. Assume that you would like to sell or buy 1,000,000. What actions will you take to make a speculation in the forward market? Calculate the expected dollar profit from making this speculation? Explain why you take this action in detail. (Please show all calculations)

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