Marie Has Done Some Research and Found That the Spot

question 21

Multiple Choice

Marie has done some research and found that the spot rate is C$1.4039 per euro.Her neighbour told her that the three-month forward rate is C$1.44 per euro.If Marie assumes a 1,000 euro long position in the forward contract,what will her profit (loss) be if the spot rate in 3 months is C$1.45 per euro?

• A) C$46.10
• B) - C$10.00
• C) C$10.00
• D) C$36.10

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Definitions:

Bushels

A measure of volume that is used for quantities of grain, fruit, or other produce.

Variable Input

Variable input refers to a production factor that can be adjusted in the short term to increase or decrease production output.

Short Run

A period during which at least one of a firm's inputs is fixed, limiting its capacity to adjust fully to changes in market demand.

Short Run

A time period in economics during which at least one factor of production is considered fixed, limiting the ability of the economy or firm to adjust to changes.