Re: ask Dcifrths...well, anything...about finance/mkts/ports that is.
thanks again, if you get bored of this no worries of course
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other problems with your example are that you're assuming that you will earn above the compound interest return every time you wait for the 10:1 payoff. but if that 10:1 payoff takes over T years, where T is the number of years investing at the risk free rate of interest earns you 1000% compound returns. if the 10:1 payoff takes longer than T years then you've "lost" money since you would have done better by doing nothing.
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What I was trying to say was we are trying to make 1000% profits above the profits we would make by simply putting it in a bank
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your example assumes that the price of the exchange rate and the interest rates are completely independent. they are highly intertwined.
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hmmmm, why so? I don't see how I made this assumption, implied or otherwise
to be clear I expect the interest rates for the USD and EUR to change over time, and be different from each other most of the time
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