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.

---

Definitions:

Détente-Style Diplomacy

A strategy aimed at easing geopolitical tensions between nations, characterized by negotiation and cooperation rather than confrontation.

Zbigniew Brzezinski

A political scientist and statesman who served as United States National Security Advisor under President Jimmy Carter from 1977 to 1981, notable for his role in U.S. foreign policy during the Cold War.

Cyrus Vance

Cyrus Vance was a distinguished American lawyer and politician, serving as the United States Secretary of State under President Jimmy Carter.

Soviet Intervention

The use of military or political force by the Soviet Union in other countries to support its own interests, commonly seen during the Cold War era.