A firm sells a currency futures contract, and then decides before the settlement date that it no longer wants to maintain such a position. It can close out its position by:
A) buying an identical futures contract.
B) selling an identical futures contract.
C) buying a futures contract with a different settlement date.
D) selling a futures contract for a different amount of currency.
E) purchasing a put option contract in the same currency.

Question

​A firm sells a currency futures contract, and then decides before the settlement date that it no longer wants to maintain such a position. It can close out its position by:
A) ​buying an identical futures contract.
B) ​selling an identical futures contract.
C) ​buying a futures contract with a different settlement date.
D) ​selling a futures contract for a different amount of currency.
E) ​purchasing a put option contract in the same currency.

Quizplus · Accepted Answer

Buying an identical futures contract offsets the original sell position, effectively closing out the firm's position in the market.

​A Firm Sells a Currency Futures Contract, and Then Decides

A Firm Sells a Currency Futures Contract, and Then Decides