UK pound spot rate Direct $ 1.2185 Indirect $ 0.8207 1-month forward Direct $ 1.2202 Indirect$ 0.8196 On January 9, 2023, you exchange 300,000 U.S. dollars for British pounds in the spot market and buy a one-month forward contract to convert pounds into U.S. dollars. What will your dollar amount be after one month? How much will you receive in U.S. dollars at the end of one month? Amount Received: $

To determine how much you'll receive in U.S. dollars after one month, follow these steps:

1. **Convert USD to GBP in the Spot Market**:
   - You exchange 300,000 USD for GBP using the direct spot rate.
   - Spot rate (Direct) = $1.2185.
   - GBP amount received = USD amount / Spot rate = $ \frac{300,000}{1.2185} \approx 246,854.80 $ GBP.

2. **Convert GBP back to USD in the Forward Market**:
   - You will use the one-month forward rate (Direct) to convert GBP back to USD.
   - Forward rate (Direct) = $1.2202.
   - USD amount received after one month = GBP amount × Forward rate = $ 246,854.80 \times 1.2202 \approx 301,003.88 $ USD.

### Amount Received:
**$301,003.88**

If you need further details or have any questions, let me know! Here are some related questions for you to consider:

1. What factors influence the exchange rates in the forex market?
2. How do spot and forward rates differ in their calculations?
3. What are the risks involved in foreign exchange trading?
4. How does interest rate parity affect forward exchange rates?
5. Can you explain how currency hedging works? 

**Tip:** Always monitor market trends and economic indicators that may affect exchange rates before making currency transactions.

On January 9, 2023, you exchange 300,000 U.S. dollars for British pounds in the spot market and buy a one-month forward contract to convert pounds into U.S. dollars. What will your dollar amount be after one month? How much will you receive in U.S. dollars at the end of one month?

Explore the calculation of exchanging 300,000 U.S. dollars to British pounds and back to U.S. dollars using spot and forward rates. This example illustrates key concepts in currency exchange, providing detailed steps and results. Suitable for high school students.

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