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STRATEGIC RULES ON SPECULATION IN THE FOREIGN EXCHANGE MARKET
Author(s) -
Ghosh Dilip K.,
Prakash Arun J.
Publication year - 2001
Publication title -
journal of financial research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.319
H-Index - 49
eISSN - 1475-6803
pISSN - 0270-2592
DOI - 10.1111/j.1475-6803.2001.tb00815.x
Subject(s) - speculation , arbitrage , foreign exchange market , foreign exchange , spot market , economics , microeconomics , forward market , spot contract , financial economics , business , industrial organization , monetary economics , finance , futures contract , electricity , electrical engineering , engineering
In this article we specify the conditions for profitable speculaion in the foreign exchange market with spot and forward contracts. We derive the unique strategic rules from the initial two‐choice situations in a given environment. Finally, in a more complex structure involving covered arbitrage, speculative profits are computed with iterative plays. JEL classification: F310