A firm sells a currency futures contract,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,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

To close out a short position in a futures contract, the firm can buy an identical futures contract, which offsets the original position.

A Firm Sells a Currency Futures Contract,then Decides Before the Settlement