If the Three-Month FR=$1/€1 and a Speculator Anticipates That SR=$1

question 14

Multiple Choice

If the three-month FR=$1/€1 and a speculator anticipates that SR=$1.02/€1 in three months,he can earn a profit by:

• A)selling euros forward
• B)purchasing euros forward
• C)selling dollars forward
• D)purchasing dollars forward

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Definitions:

Revenue

The total amount of money received by a company for goods sold or services provided during a certain time period.

IFRS

Stands for International Financial Reporting Standards, a set of accounting standards developed by the International Accounting Standards Board (IASB) that is globally accepted for preparing financial statements.

IASB Standards

International Accounting Standards Board Standards, which are a set of accounting rules followed by companies across the globe to ensure transparency and comparability of financial statements.

Retrospectively Apply

The application of a new accounting policy to transactions, other events, and conditions as if that policy had always been applied.