​A Firm Sells a Currency Futures Contract, and Then Decides

question 75

Multiple Choice

​A firm sells a currency futures contract, and then decides before the settlement date that it no longer wants to maintain such a position. It can close out its position by:

• A) ​buying an identical futures contract.
• B) ​selling an identical futures contract.
• C) ​buying a futures contract with a different settlement date.
• D) ​selling a futures contract for a different amount of currency.
• E) ​purchasing a put option contract in the same currency.

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Definitions:

Domestic Auto Industry

Refers to the automobile manufacturers and suppliers operating within a specific country's borders, focusing on the production, marketing, and sale of vehicles domestically.

Comparative Advantage

The capacity of a person, business, or nation to generate a product or service with a lesser opportunity cost than that of its rivals.

Currency Rises

A scenario where the value of a particular currency increases relative to others, affecting international trade and economic dynamics.

Cultural Barrier

involves differences in cultural practices, beliefs, and values that can impede understanding, interaction, and cooperation among people from different cultural backgrounds.