You expect the value of the Japanese Yen to weaken relative to the U.S. dollar. The Yen futures contract size is 12,500,000 Yen and it is priced at $/100 Yen. You go short in the Dec 2021 futures contract based on your expectations of a weaker Yen and you enter the market at a price of $0.917 per 100 Yen. Then in 2 weeks’ time you liquidate your futures position at a price of $0.921 per 100 Yen. a) Calculate your profit/loss for 1 futures contract in US dollars (ignore brokerage fees). b) All else equal, would an economic recession in Canada cause the USD/CDN exchange rate to increase, decrease, or stay the same?
You expect the value of the Japanese Yen to weaken relative to the U.S. dollar. The Yen futures contract size is 12,500,000 Yen and it is priced at $/100 Yen. You go short in the Dec 2021 futures contract based on your expectations of a weaker Yen and you enter the market at a price of $0.917 per 100 Yen. Then in 2 weeks’ time you liquidate your futures position at a price of $0.921 per 100 Yen. a) Calculate your profit/loss for 1 futures contract in US dollars (ignore brokerage fees). b) All else equal, would an economic recession in Canada cause the USD/CDN exchange rate to increase, decrease, or stay the same?
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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You expect the value of the Japanese Yen to weaken relative to the U.S. dollar. The Yen futures contract size is 12,500,000 Yen and it is priced at $/100 Yen. You go short in the Dec 2021 futures contract based on your expectations of a weaker Yen and you enter the market at a price of $0.917 per 100 Yen. Then in 2 weeks’ time you liquidate your futures position at a price of $0.921 per 100 Yen.
a) Calculate your
b) All else equal, would an economic recession in Canada cause the USD/CDN exchange rate to increase, decrease, or stay the same?
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