Explain how this leader in your firm can speculate on the belief that the euro will be $1.41 in 12 months.

Finance assignment – foreign exchange prediction

This leader in the firm can speculate on the belief that the euro will be $1.41 in 12 months by investing a sum of money at today’s exchange rate, which is currently around $1.27 per euro. If this expectation turns out to be correct and the euro increases to 1.41 USD within twelve months, a profit of 11.02% would be made from this investment (ignoring exchange rate fees). To calculate this, we need to take the difference between today’s exchange rate ($1.27) and next year’s expected exchange rate($1.41), divide it by today’s exchange rate ($1.27), then multiply it by 100 for our percentage return: $$\frac{(1.41 – 1 .27 )}{ 1 .27 } \times 100=11 .02$$

Although this speculative investment provides a higher return than some other similar investments with lower risks, it should not automatically be selected as an appropriate option due to its inherent volatility stemming from foreign currency fluctuations over time where unexpected losses are possible should market shifts take place suddenly etc., so consideration especially regarding inflation rates plus whether returns generated pass muster when factoring therein too needs taken into account before jumping ahead since many times better + safer options exist & benefit/reward ratio doesn’t quite cut given circumstances presented wise.