Question: When a short and a long position in the FX market can incur losses? b. Explain stabilizing speculation in the FX market and illustrate it

When a short and a long position in the FX market can incur losses?

b. Explain stabilizing speculation in the FX market and illustrate it graphically.

c. What can be the rationale behind a firm going for short-term investment in foreign currency over domestic currency?

d. The following exchange rates are quoted:

GBP/AUD 0.3820-90

AUD/EUR 1.6400-80

Calculate bid and ask rates and their spread on the exchange rate between GBP and EUR expressed in the indirect quotation from a British perspective.

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a Both short and long positions in the FX market can incur losses under certain conditions Here are the scenarios Short position If the value of the foreign currency being sold increases relative to t... View full answer

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