You Enter into a Forward Contract to Take Delivery of 1

question 86

Multiple Choice

You enter into a forward contract to take delivery of 1 million euros 3 months from now.What happens to the price you will pay at expiration if the euro depreciates during the contract period?

• A) Your price will increase.
• B) Your price will decrease.
• C) Your price was fixed at the onset of the contract.
• D) Your price was fixed but you will receive correspondingly more euros due to the depreciation.

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Definitions:

Equal Protection Clause

A clause in the Fourteenth Amendment of the U.S. Constitution that prevents states from denying “the equal protection of the laws” to any citizen. This clause implies that all citizens are created equal.

State's Rights

The political powers reserved for U.S. states by the Constitution, distinct from those delegated to the federal government.

Checks and Balances

A system that allows each branch of a government to amend or veto acts of another branch to prevent any one branch from exerting too much power.

President Veto

A presidential veto is the power of the president to refuse approval of legislation passed by Congress, which can be overridden only by a two-thirds vote in both the House and the Senate.