Which of the following would result in a profit of 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 would result in a profit when the euro depreciates because the investor would be able to buy back the contract at a lower price than they sold it for. Buying a euro futures contract (choice A and C) would result in a loss when the euro depreciates because the investor would then be obligated to purchase euros at a higher price than the current market value. Choice D is incorrect because B is a valid choice for profiting from a depreciating euro.

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