Question

Question 12 (1 point) Assume it is June 1, 2016 and the exchange rate for U.S. dollars and British pounds is approximately $1.00 = £0.70. You are a currency speculator. Somehow you know that on June 23, 2016, the British will vote to approve Brexit, removing the U.K. from the European Union. Suppose you also know that about week after the vote, on July 1, 2016, the exchange rate for U.S. dollars and British pounds will have increased to approximately $1.00 = £0.89. In your portfolio (on June 1), you have $3,000,000 in dollars and £3,000,000 in pounds with which to speculate. Your intent is to profit from currency speculation. Using the money in your portfolio to make currency trades on June 1 and on July 1, calculate how much profit you could make in dollars. Provide your answer in dollars rounded to one decimal place. Use a negative sign "-" for negative values. Do not include any symbols, such as "$,"",""%," or "," in your answer. Your Answer: ar E Answer

Answer 1

Given initially, $1.00 2£0 70 One Eusor 1 2 1.4285714 0.70 2 3 000 000 - 2100 000 2 900000 The profit a 900000 A 14285714 1 285714.26 for 2 Euros

0.89 At enehange rate of £0.89 $1 2 One Euro = a 2 1. 1 2 35955 Loss for dollar a 3000000 - 2670000 z 33 0000 Therefore, Net profita 1,285,714.26 - 330,000 2 1955714.26 dur.

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