A Forward Market Contract to Buy Japanese Yen Three Months

question 10

Multiple Choice

A forward market contract to buy Japanese yen three months in the future at a price of ¥105/$ will:

• A) insulate the buyer from changes in interest rates.
• B) protect the buyer from changes in exchange rates.
• C) lock in a profit based on current exchange rates.
• D)require delivery of the yen at the Chicago Board of Trade.

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