Suppose that today is 13 August 2019 and the current exchange rate is HKD 6.20 per AUD 1.00. The figure below shows your prediction with respect to the HKD's movements relative to the AUD between now and mid-September 2019. HKD per AUD 7.2 6.8 6.4 6.0 13/08 18/08 23/08 28/08 2/09 7/09 12/09 today Note: HKD = Hong Kong Dollar; AUD = Australian Dollar. You intend to capitalize on your prediction by using the 15/9/2019-maturity forward contract, which is currently priced at HKD 6.00 per AUD 1.00. Which of the following are you most likely to undertake today to capitalize on your prediction? (Select the best answer.) O a. Long forward contract to buy AUD O b. Short forward contract to sell AUD O C. Long forward contract to sell HKD d. Either (a) or (C) will work
Suppose that today is 13 August 2019 and the current exchange rate is HKD 6.20 per AUD 1.00. The figure below shows your prediction with respect to the HKD's movements relative to the AUD between now and mid-September 2019. HKD per AUD 7.2 6.8 6.4 6.0 13/08 18/08 23/08 28/08 2/09 7/09 12/09 today Note: HKD = Hong Kong Dollar; AUD = Australian Dollar. You intend to capitalize on your prediction by using the 15/9/2019-maturity forward contract, which is currently priced at HKD 6.00 per AUD 1.00. Which of the following are you most likely to undertake today to capitalize on your prediction? (Select the best answer.) O a. Long forward contract to buy AUD O b. Short forward contract to sell AUD O C. Long forward contract to sell HKD d. Either (a) or (C) will work
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Suppose that today is 13 August 2019 and the current exchange rate is HKD 6.20 per AUD 1.00.
The figure below shows your prediction with respect to the HKD's movements relative to the AUD between now and mid-September 2019.
HKD per AUD
7.2
6.8
6.4
6.0
13/08
18/08 23/08
28/08
2/09
7/09
12/09
today
Note: HKD = Hong Kong Dollar; AUD = Australian Dollar.
%3D
%3D
You intend to capitalize on your prediction by using the 15/9/2019-maturity forward contract, which is currently priced at HKD 6.00 per AUD 1.00.
Which of the following are you most likely to undertake today to capitalize on your prediction? (Select the best answer.)
O a. Long forward contract to buy AUD
O b. Short forward contract to sell AUD
O C. Long forward contract to sell HKD
O d. Either (a) or (c) will work
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