Solved: Difference between forward contract price and futures price, Accounting Standards

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Difference between forward contract price and futures price

Response to the following problem:

Speculating with Currency Futures

Assume that a March futures contract on Mexican pesos was available in January for $.09 per unit. Also assume that forward contracts were available for the same settlement date at a price of $.092 per peso.

How could speculators capitalize on this situation, assuming zero transaction costs?

How would such speculative activity affect the difference between the forward contract price and the futures price?

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Accounting Standards: Difference between forward contract price and futures price

Reference No:- TGS02063149

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Accounting Standards: Difference between forward contract price and futures price

Reference No:- TGS02063149

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