You Have One Short Position in Foreign Exchange Futures Contracts

question 9

Multiple Choice

You have one short position in foreign exchange futures contracts on £s.The contract size is £100,000.During the day the futures exchange rate (measured in $/£) increased by $0.01/£ while the spot exchange rate decreased by 0.01.As a result,you:

• A) have won $1,000.
• B) have lost $1,000.
• C) have neither won nor lost any money.
• D) are unable to answer based on the information provided.

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Definitions:

Fixed Cost

Costs that do not vary with the level of output or sales, such as rent, salaries, and insurance premiums.

Total Cost

The complete cost of production, including both fixed and variable costs.

Computer Software

Computer software refers to a set of instructions or programs that tell a computer how to perform specific tasks.

Sunk Cost

Expenditure that has been made and cannot be recovered.