When the futures price on euros is below the forward rate on euros for the same settlement date, astute investors may attempt to simultaneously ____ euros forward and ____ euro futures.
A) sell; sell
B) buy; sell
C) sell; buy
D) buy; buy

Question

​When the futures price on euros is below the forward rate on euros for the same settlement date, astute investors may attempt to simultaneously ____ euros forward and ____ euro futures.
A) ​sell; sell
B) ​buy; sell
C) ​sell; buy
D) ​buy; buy

Quizplus · Accepted Answer

If the futures price is below the forward rate, it indicates that the market expects the euro to appreciate. To take advantage of this, investors may sell euros forward to lock in the current exchange rate and buy euro futures to benefit from the expected appreciation.

​When the Futures Price on Euros Is Below the Forward

When the Futures Price on Euros Is Below the Forward