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24 September, 15:28

On July: On July 1, 2017, a company enters into a forward contract to buy 10 million Japanese yen on January 1, 2018. 1, 2017, a company enters into a forward contract to buy 10 million Japanese yen on January 1, 2018. On September 1, 2017, it enters into a forward contract to sell 10 million Japanese yen on January 1, 2018. Describe the payoff from this strategy.

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  1. 24 September, 19:03
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    The reward in this strategy will depend on the international price at which the Yen is placed in the purchase and sale periods.

    Example:

    If in July it enters into a contract to buy the 10 million Japanese Yen on January 1, 2018. At a price of 100 Yen per dollar.

    Then in September the Yen does not cost 100 per dollar but it costs 108 Yen per dollar. Then I sell what I received in the first contract at a more expensive price and I will get a profit by exchange rate.
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