When the Futures Price Is Equal to the Spot Rate

question 46

Multiple Choice

When the futures price is equal to the spot rate of a given currency, and the foreign country exhibits a higher interest rate than the UK interest rate, astute investors may attempt to simultaneously ____ the foreign currency, invest it in the foreign country, and ____ futures in the foreign currency.

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

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Definitions:

Enzymes

Biological molecules that act as catalysts, speeding up reactions in living organisms without being consumed in the process.

ATP

or Adenosine triphosphate is the primary energy carrier in all living organisms, providing energy for most biochemical cellular processes.

Weak Acid

An acid that partially dissociates into its ions in solution, resulting in a less complete release of hydrogen ions.

Reaction Rate

The speed at which a chemical reaction occurs, influenced by factors such as temperature, concentration, and presence of catalysts.