usd/mxn project
Budget: $10 – $30 USD
. If you had speculated the day of DC1 by purchasing 1 million units of the foreign currency in the spot
market, and then closed your position the day of DC2, what would be your raw profit or loss?
Estimate the carryover cost/revenue using LIBOR rates and broker rollover rates and estimate the net
profit/loss.
5b. If you had speculated the day of DC1 by selling 1 million units of the foreign currency in the spot
market, and then closed your position the day of DC2, what would be your gross profit or loss?
Estimate the carryover cost/revenue using LIBOR rates and broker rollover rates and estimate the net
profit/loss.
6. Refer to the consensus forecast obtained from Fxstreet,com. Did they suggest to buy or to sell the
foreign currency? identify the trades suggested by "analysts" in your Excel file
How much was the net P/L if you traded 1,000,000 units of the FOREIGN currency (100,000,000 in
the case of the JPY)
7. What did you learn about the use of financial instruments to speculate? Summarize your
understanding in one paragraph. Discuss if the currency went up/down or stayed flat and how that
affected the different strategies. Which strategy was most profitable? Which strategy performed the
worst? Was it good to follow the "experts"? Which option is better ATM, ITM or OTM? Why are
rollover estimates different among brokers? What conclusions can you get from this exercise
market, and then closed your position the day of DC2, what would be your raw profit or loss?
Estimate the carryover cost/revenue using LIBOR rates and broker rollover rates and estimate the net
profit/loss.
5b. If you had speculated the day of DC1 by selling 1 million units of the foreign currency in the spot
market, and then closed your position the day of DC2, what would be your gross profit or loss?
Estimate the carryover cost/revenue using LIBOR rates and broker rollover rates and estimate the net
profit/loss.
6. Refer to the consensus forecast obtained from Fxstreet,com. Did they suggest to buy or to sell the
foreign currency? identify the trades suggested by "analysts" in your Excel file
How much was the net P/L if you traded 1,000,000 units of the FOREIGN currency (100,000,000 in
the case of the JPY)
7. What did you learn about the use of financial instruments to speculate? Summarize your
understanding in one paragraph. Discuss if the currency went up/down or stayed flat and how that
affected the different strategies. Which strategy was most profitable? Which strategy performed the
worst? Was it good to follow the "experts"? Which option is better ATM, ITM or OTM? Why are
rollover estimates different among brokers? What conclusions can you get from this exercise