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If the Spot Price of the Euro Is $1

Question 18

Multiple Choice

If the spot price of the euro is $1.10 per euro and the 30-day forward rate is $1.00 per euro, and you believe that the spot rate in 30 days will be $1.05 per euro, then you can try to maximize speculative gains by:


A) buying euros in the current spot market and selling euros in 30 days at the future spot rate.
B) signing a forward foreign exchange contract to sell euros in 30 days.
C) signing a forward foreign exchange contract to sell dollars in 30 days.
D) buying dollars in the spot market and selling the dollars in 30 days at the future spot rate.

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