Peter Simpson Thinks That the U

question 7

Multiple Choice

Peter Simpson thinks that the U.K. pound will cost $1.43/£ in six months. A 6-month currency futures contract is available today at a rate of $1.44/£. If Peter was to speculate in the currency futures market, and his expectations are correct, which of the following strategies would earn him a profit?

• A) Sell a pound currency futures contract.
• B) Buy a pound currency futures contract.
• C) Sell pounds today.
• D) Sell pounds in six months.

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Definitions:

Variables

factors or conditions that can change or vary within an experiment or study, potentially impacting the results.

Scientific Method

A systematic approach to investigation that includes observation, hypothesis formulation, experimentation, and conclusion to validate or modify the hypothesis.

Study Retention

The ability to maintain and recall information that has been learned over time.

Analyzing Data

The process of inspecting, cleaning, transforming, and modeling data to discover useful information and support decision-making.