Which of the following investment strategies will allow me to make a profit if I anticipate that the value of the Euro, a currency that I do not own, is going to fall over the next 90 days and I am correct in my prediction?

Question

Quizplus · Accepted Answer

Selling Euros short means borrowing Euros from a broker, selling them at the current exchange rate, and then buying them back later when the value falls. This will result in a profit if the Euro does indeed fall in value over the next 90 days. Buying Euros short would be the opposite - buying Euros in the hope of selling them later at a higher price, which would not result in a profit if the value falls. Selling dollars short and buying Euros long would not be effective strategies for making a profit if the Euro falls in value.

Which of the Following Investment Strategies Will Allow Me to Make