Which of the following would result in a profit on a euro futures contract when the euro depreciates?
A) Buy a euro futures contract; sell a futures contract after the euro has depreciated.
B) Sell a euro futures contract; buy a futures contract after the euro has depreciated.
C) Buy a euro futures contract; buy an additional futures contract after the euro has depreciated.
D) None of these would result in a profit when the euro depreciates.

Question

Quizplus · Accepted Answer

Selling a euro futures contract before the euro depreciates and then buying it back after it has depreciated will result in a profit. This is because the investor will be able to buy back the futures contract at a lower price than they sold it for, resulting in a gain. The other options involve buying futures contracts, which would result in a loss when the euro depreciates.

Which of the Following Would Result in a Profit on a Euro