If a Speculator Observes That the Current 3-Months Forward Rate

question 27

Multiple Choice

If a speculator observes that the current 3-months forward rate on Swiss francs is $1.05 = 1 franc, but he/she expects that the spot rate in 3 months will be $1.10 = 1 franc, then this Speculator would now

• A) buy dollars on the forward market.
• B) buy francs on the forward market.
• C) sell francs on the forward market.
• D) buy francs on the spot market and simultaneously sell francs on the 3-months forward Market if the current spot rate is $1.07 = 1 franc.

---

Definitions:

Reaction Time

The amount of time it takes to respond to a stimulus, often used as a measure of sensory and cognitive processing speed.

Brain Slowdown

A phenomenon referring to the reduction in speed of processing information, decision-making, and motor responses seen in individuals, often as a result of aging or neurological conditions.

Peripheral Vision

The ability to see objects and movement outside of the direct line of vision, encompassing the broader visual field.

Reaction Time

The amount of time it takes to respond to a stimulus.