{"id":213753,"date":"2025-05-12T09:49:26","date_gmt":"2025-05-12T09:49:26","guid":{"rendered":"https:\/\/learnexams.com\/blog\/?p=213753"},"modified":"2025-05-12T09:49:28","modified_gmt":"2025-05-12T09:49:28","slug":"assuming-a-speculator-believes-that-the-canadian-dollar-cad-is-likely-to-appreciate-versus-the-us-dollar-and-the-mexican-peso-mxn-is-likely-to-depreciate-versus-the-us-dollar","status":"publish","type":"post","link":"https:\/\/www.learnexams.com\/blog\/2025\/05\/12\/assuming-a-speculator-believes-that-the-canadian-dollar-cad-is-likely-to-appreciate-versus-the-us-dollar-and-the-mexican-peso-mxn-is-likely-to-depreciate-versus-the-us-dollar\/","title":{"rendered":"Assuming a speculator believes that the Canadian Dollar (CAD) is likely to appreciate versus the US Dollar and the Mexican Peso (MXN) is likely to depreciate versus the US Dollar"},"content":{"rendered":"\n<p>Assuming a speculator believes that the Canadian Dollar (CAD) is likely to appreciate versus the US Dollar and the Mexican Peso (MXN) is likely to depreciate versus the US Dollar. How can the speculator create a trade without using the US Dollar? Select all that apply<\/p>\n\n\n\n<p>Buy MXN\/CAD<br>Buy CAD\/MXN<br>Sell CAD\/MXN<br>Sell MXN\/CAD<\/p>\n\n\n\n<p><strong><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-ast-global-color-0-color\">The Correct Answer and Explanation is:<\/mark><\/strong><\/p>\n\n\n\n<p><strong>Correct answers:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>\u2705 <strong>Buy CAD\/MXN<\/strong><\/li>\n\n\n\n<li>\u2705 <strong>Sell MXN\/CAD<\/strong><\/li>\n<\/ul>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Explanation:<\/strong><\/h3>\n\n\n\n<p>A speculator expects:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Canadian Dollar (CAD) to appreciate<\/strong> (increase in value)<\/li>\n\n\n\n<li><strong>Mexican Peso (MXN) to depreciate<\/strong> (decrease in value)<\/li>\n\n\n\n<li>The trade <strong>must not involve the US Dollar (USD)<\/strong> directly.<\/li>\n<\/ul>\n\n\n\n<p>In the foreign exchange (forex) market, currency pairs are quoted in the format <strong>Base\/Quote<\/strong>, where:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Base currency<\/strong> is the first in the pair.<\/li>\n\n\n\n<li><strong>Quote currency<\/strong> is the second.<\/li>\n\n\n\n<li>The price tells how much of the quote currency is needed to buy one unit of the base currency.<\/li>\n<\/ul>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Analyzing the Pairs:<\/strong><\/h3>\n\n\n\n<h4 class=\"wp-block-heading\">\u2705 <strong>1. Buy CAD\/MXN<\/strong><\/h4>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Base<\/strong>: CAD<\/li>\n\n\n\n<li><strong>Quote<\/strong>: MXN<\/li>\n\n\n\n<li>This means the speculator is <strong>buying Canadian Dollars and selling Mexican Pesos<\/strong>.<\/li>\n\n\n\n<li>If the <strong>CAD appreciates<\/strong> and <strong>MXN depreciates<\/strong>, the CAD becomes more valuable relative to the MXN.<\/li>\n\n\n\n<li>The price of CAD\/MXN will <strong>increase<\/strong>, resulting in a <strong>profit<\/strong> for someone who bought CAD\/MXN.<\/li>\n\n\n\n<li>\u2705 This is a correct trade.<\/li>\n<\/ul>\n\n\n\n<h4 class=\"wp-block-heading\">\u2705 <strong>2. Sell MXN\/CAD<\/strong><\/h4>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Base<\/strong>: MXN<\/li>\n\n\n\n<li><strong>Quote<\/strong>: CAD<\/li>\n\n\n\n<li>This means the speculator is <strong>selling Mexican Pesos and buying Canadian Dollars<\/strong>.<\/li>\n\n\n\n<li>If MXN weakens and CAD strengthens, the price of MXN\/CAD will <strong>fall<\/strong>, meaning fewer CAD are needed to buy 1 MXN.<\/li>\n\n\n\n<li>Selling at a higher price and buying back at a lower price earns a <strong>profit<\/strong>.<\/li>\n\n\n\n<li>\u2705 This is also a correct trade.<\/li>\n<\/ul>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h3 class=\"wp-block-heading\">\u274c Incorrect Choices:<\/h3>\n\n\n\n<h4 class=\"wp-block-heading\">\u274c <strong>Buy MXN\/CAD<\/strong><\/h4>\n\n\n\n<ul class=\"wp-block-list\">\n<li>This means <strong>buying Mexican Pesos and selling Canadian Dollars<\/strong>.<\/li>\n\n\n\n<li>This would lose money if the MXN weakens and CAD strengthens.<\/li>\n\n\n\n<li>\u274c Incorrect given the speculator\u2019s outlook.<\/li>\n<\/ul>\n\n\n\n<h4 class=\"wp-block-heading\">\u274c <strong>Sell CAD\/MXN<\/strong><\/h4>\n\n\n\n<ul class=\"wp-block-list\">\n<li>This is betting that CAD will weaken against MXN.<\/li>\n\n\n\n<li>Since the expectation is the opposite (CAD up, MXN down), this is \u274c incorrect.<\/li>\n<\/ul>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Conclusion:<\/strong><\/h3>\n\n\n\n<p>To profit from CAD appreciating and MXN depreciating without using USD:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>\u2705 <strong>Buy CAD\/MXN<\/strong><\/li>\n\n\n\n<li>\u2705 <strong>Sell MXN\/CAD<\/strong><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Assuming a speculator believes that the Canadian Dollar (CAD) is likely to appreciate versus the US Dollar and the Mexican Peso (MXN) is likely to depreciate versus the US Dollar. How can the speculator create a trade without using the US Dollar? Select all that apply Buy MXN\/CADBuy CAD\/MXNSell CAD\/MXNSell MXN\/CAD The Correct Answer and [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[25],"tags":[],"class_list":["post-213753","post","type-post","status-publish","format-standard","hentry","category-exams-certification"],"_links":{"self":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/213753","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/comments?post=213753"}],"version-history":[{"count":0,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/213753\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/media?parent=213753"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/categories?post=213753"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/tags?post=213753"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}