When the Futures Price Is Above the Forward Rate, Astute

question 94

Multiple Choice

When the futures price is above the forward rate, astute investors may attempt to simultaneously buy a currency forward and sell futures in that currency. These actions would place ____ pressure on the forward rate and ____ pressure on the futures rate.​

• A) ​upward; downward
• B) ​upward; upward
• C) ​downward; upward
• D) ​downward; downward

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Definitions:

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