​When the Futures Price on Euros Is Below the Forward

question 2

Multiple Choice

​When the futures price on euros is below the forward rate on euros for the same settlement date, astute investors may attempt to simultaneously ____ euros forward and ____ euro futures.

• A) ​sell; sell
• B) ​buy; sell
• C) ​sell; buy
• D) ​buy; buy

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Definitions:

Box

A container, often square or rectangular, used for storage or shipping.

Consumer Surplus

Consumer surplus is the difference between the total amount consumers are willing to pay for a good or service and the total amount they actually pay.

Producer Surplus

The difference between what producers are willing to accept for a product because of its cost of production and what they actually receive (the market price).

Economy

A system for coordinating society’s productive activities.