Assume You Are an American Importer Who Must Pay 500,000

Assume you are an American importer who must pay 500,000 Euros at the end of 90 days when you receive 1,000 cases of French wine at your warehouse in New York. Suppose that you have not covered this transaction in the forward market. In which of the following cases will you suffer the largest loss?

A) The euro spot exchange rate value vis-à-vis the dollar does not change
B) The euro (spot) initially appreciates by 2 percent, and then depreciates by 1 percent
C) The euro (spot) initially depreciates by 3 percent, and then appreciates by 2 percent
D) The euro (spot) initially appreciates by 3 percent, and then depreciates by 2.9 percent