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.