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 the above 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 a futures contract after it has depreciated would result in a profit. This is because the price of the futures contract would have decreased when the euro has depreciated, so the investor would have sold high and bought low. Option A would result in a loss because the futures contract was bought before the depreciation occurred. Option C involves buying an additional futures contract, which may or may not result in a profit depending on the market conditions. Option D is not a viable choice as it provides no solution.

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