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Suppose That Two Counterparties, a and B, Enter a Three-Month

Question 38

Multiple Choice

Suppose that two counterparties, A and B, enter a three-month forward contract, whereby A buys USD1 million at a forward rate of AUD/USD 1.7662.
Which party is likely to default if the spot rate three months hence is 1.8000?


A) counterparty A
B) counterparty B
C) both counterparty A and counterparty B
D) neither counterparty

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