Peter Simpson Thinks That the U

question 7

Multiple Choice

Peter Simpson thinks that the U.K. pound will cost $1.43/£ in six months. A 6-month currency futures contract is available today at a rate of $1.44/£. If Peter was to speculate in the currency futures market, and his expectations are correct, which of the following strategies would earn him a profit?

• A) Sell a pound currency futures contract.
• B) Buy a pound currency futures contract.
• C) Sell pounds today.
• D) Sell pounds in six months.

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Definitions:

Anxiety Sensitivity

A psychological trait involving the fear of anxiety-related sensations due to beliefs these sensations have harmful somatic, psychological, or social consequences.

Excessively Worried

Experiencing a state of extreme concern and anxiety over actual or potential problems.

Generalized Anxiety Disorder (GAD)

A mental health disorder characterized by persistent and excessive worry about various aspects of daily life, often to the point of interfering with daily functioning.

Cognitive-Behavioral Therapies

A group of therapeutic approaches that identify and challenge negative thoughts and behaviors to improve emotional regulation and personal coping strategies.