Suppose you think that the Canadian dollar exchange rate will appreciate against the U.S.dollar over the next month.What should you do now in anticipation of profit?
A)Buy Canadian dollars.
B)Buy U.S.dollars.
C)Sell Canadian dollars.
D)Sell U.S.dollars.
E)Do both A and D.

Question

Quizplus · Accepted Answer

If you believe the Canadian dollar will appreciate against the U.S. dollar, you should buy Canadian dollars (A) because they will be worth more in the future. At the same time, selling U.S. dollars (D) would be wise because they will depreciate relative to the Canadian dollar, making this combination (E) the most profitable strategy.

Suppose You Think That the Canadian Dollar Exchange Rate Will