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:

South Korea

A country in East Asia, located on the southern half of the Korean Peninsula, known for its advanced technology and vibrant culture.

Member-Nations

Countries that are part of an international organization or coalition, agreeing to adhere to its rules and participate in its activities.

Douglas MacArthur

An American five-star general and Field Marshal of the Philippine Army who was Chief of Staff of the United States Army during the 1930s and played a prominent role in the Pacific theater during World War II.

Harry S. Truman

The 33rd president of the United States (1945–1953) known for his leadership during the final stages of World War II and the early years of the Cold War.