How to calculate profits and losses (MODUL 4-16)

The correct answer is C.

In this case, our speculator sold US dollars and received Canadian dollars. As a result, the speculator received 1.1957 Canadian dollars for each US dollar (the bid price, or the price at which the dealer would be willing to sell Canadian dollars for US dollars). The speculator received 597,850 Canadian dollars (1.1957 X 500,000). Subsequently, the value of the US dollar depreciated against the Canadian dollar. The speculator bought 500,000 US dollars and sold Canadian dollars for 1.1866 (the dealer ask price) and paid 593,300 Canadian dollars. The speculator still had 4,550 Canadian dollars, which represents his profit. However, before you can answer the question, you must convert Canadian dollars into US dollars.

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