What do you think would happen to the futures price

Reference no: EM131325138

Assume that, on 1 November, the spot rate of the £/US$ was $1.58 and the price on a December futures contract was $1.59. Assume that the pound depreciates over November, so that by 30 November it is worth $1.51.

(a) What do you think would happen to the futures price over the month of November? Why?

(b) If you expected this to occur, would you have purchased or sold a December futures contract on GBP on 1 November? Explain.

Reference no: EM131325138

Questions Cloud

Could the war of 1812 be considered americas second war : Could the War of 1812 be considered America's second war for independence? Explain.

Represents the gene for normal pigmentation : Where n represent gene for albinism and N represents the gene for normal pigmentation.

What is crypton cost of capital where the firm rate : Crypton Electronics has a capital structure consisting of 43% common stock and 57% debt. A debt issue of $1000 par value, 5.7% bonds that mature in 15 years and pay annual interest will sell for $974. Dividends have grown at the rate of 5.1% per y..

Construct a five-equation econometric model of the state : Construct a five-equation econometric model of the state of Indula. There will be a consumption equation, an investment equation, a tax receipt equation, an equation representing the GDP identity, and a national income equation.

What do you think would happen to the futures price : What do you think would happen to the futures price over the month of November? Why?- If you expected this to occur, would you have purchased or sold a December futures contract on GBP on 1 November? Explain.

Amount of waste and pollution that you create : 1. How can/do YOU reduce the amount of waste and pollution that you create? In other words, describe 3 things that you can do/already do to reduce, reuse and recycle more.

Explore the potential limitations of this authors view : Analyze whether he or she agrees or disagrees with the idea that all people-regardless of race, nationality, or religion-experience cities as vibrant sites of cultural exchange and enrichment. Be sure to cite specific details from the text that ei..

What are the components of an option premium : What are the components of an option premium? Why is the price of an option always greater than its intrinsic value?

What was the actual annual compound growth rate : If sales in 2003 were $60,000 and they grew to $100,000 by 2007 (a four-year period), what was the actual annual compound growth rate?

User Account

All Pages