Which of the Following Is the Least Feasible Strategy for a Speculator

question 47

Multiple Choice

Which of the following is the least feasible strategy for a speculator who expects the Australian dollar to depreciate?

• A)sell Australian dollars forward and then purchase them in the spot market just before fulfilling the forward obligation
• B)sell futures contracts on Australian dollar; purchase Australian dollars in the spot market just before fulfilling the futures obligation
• C)purchase put options on Australian dollars, at some point before the expiration date, when the spot rate is less than the exercise price, purchase Australian dollars in the spot market and then exercise the put option
• D)purchase call options on Australian dollars; at some point before the expiration date, exercise the call option and then sell the Australian dollars received in the spot market
• E)All of the above are possible strategies for a speculator who expects the Australian dollar to depreciate.

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Definitions:

Partnership

An authorized business arrangement where two or more partners share both the administration and the profits.

Dissolution

The closure or termination of an entity's existence, such as a corporation or partnership.

UPA

Uniform Partnership Act, which is legislation adopted by various states in the USA to govern partnership formation and operation.

Causes

The reasons or motivations behind an event or action, explaining why it occurred.