For an investor who starts with pesos and wants to end up with pesos in the future, which of the following choices is an example of an uncovered international investment?
A. Sell dollars at the spot rate, invest the proceeds in foreign currency-denominated financial instruments, and then, buy pesos at the future spot rate
B. Buy a peso-denominated financial asset
C. Sell pesos at the spot rate, invest the proceeds in foreign currency-denominated financial instruments, and sign a forward exchange contract to buy the foreign currency
D. Sell pesos at the spot rate, invest the proceeds in foreign currency-denominated financial instruments, and sign a forward exchange contract to buy pesos
Answer: A
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A) positive, upward B) positive, downward C) negative, upward D) negative, downward
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