If speculators expect the spot rate of the yen in 60 days to be ____ than the 60-day forward rate on the yen, they will ____ the yen forward and put ____ pressure on the yen's forward rate.
A) higher; buy; upward
B) higher; sell; downward
C) higher; sell; upward
D) lower; buy; upward

Question

Quizplus · Accepted Answer

If speculators expect the spot rate of the yen in 60 days to be higher than the 60-day forward rate, they will buy the yen forward, anticipating a profit, which puts upward pressure on the yen's forward rate.

If Speculators Expect the Spot Rate of the Yen in 60