D
DeletedUser394
Guest
I'm having trouble figuring this out.
Let's say the CAD and the USD are at parity, 1:1
You buy an asset in CAD for $10,000. The asset in question is independent of currency, and you can buy/sell it in any currency you want (I'm basically talking about precious metals.. or bitcoins, or anything really).
Now you have this asset worth $10,000 CAD but then the CAD loses 10% of its value compared to the USD and now the currency ratio is 0.90:1.
The underlying value of the asset hasn't changed and is still worth $10,000 CAD, but the CAD is worth less compared to other currencies.
If you elect to sell in USD and then convert back to CAD do you actually make a profit when the value of the asset hasn't changed, or is that already priced into the asset? I think so, but for some reason I'm having trouble seeing it.
Is there an equation that would explain the above situation?
Thanks!
Let's say the CAD and the USD are at parity, 1:1
You buy an asset in CAD for $10,000. The asset in question is independent of currency, and you can buy/sell it in any currency you want (I'm basically talking about precious metals.. or bitcoins, or anything really).
Now you have this asset worth $10,000 CAD but then the CAD loses 10% of its value compared to the USD and now the currency ratio is 0.90:1.
The underlying value of the asset hasn't changed and is still worth $10,000 CAD, but the CAD is worth less compared to other currencies.
If you elect to sell in USD and then convert back to CAD do you actually make a profit when the value of the asset hasn't changed, or is that already priced into the asset? I think so, but for some reason I'm having trouble seeing it.
Is there an equation that would explain the above situation?
Thanks!
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