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1 December, 20:57

The current spot exchange rate is $1.55/€ and the three-month forward rate is $1.50/€. You enter into a short position on €1,000. At maturity, the spot exchange rate is $1.60/€. How much have you made or lost? A. Lost $100 B. Made €100 C. Made $150 D. Lost $50

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  1. 1 December, 21:00
    0
    Answer is A. Lost $100.

    Refer below for the explanation.

    Explanation:

    Short position includes selling the money.

    You will get (1.5 * 1,000) = $1,500.

    In any case, you could get (1.6 * 1,000) = $1,600

    In the event that you didn't have the forward agreement.

    So you lost $1,600 - $1,500 = $100.
  2. 1 December, 21:25
    0
    A. Lost $100

    Explanation:

    Short position refers to a trading technique which involves selling the currency for it to buy later and make a profit.

    To calculate the loss if you don't have a forward contract:

    Your loss will be

    = €1,000 x ($1.50/€ - $1.60/€)

    = $100
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Home » Business » The current spot exchange rate is $1.55/€ and the three-month forward rate is $1.50/€. You enter into a short position on €1,000. At maturity, the spot exchange rate is $1.60/€. How much have you made or lost? A. Lost $100 B. Made €100 C.
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