A Firm Sells a Currency Futures Contract, and Then Decides

question 61

Multiple Choice

A firm sells a currency futures contract, and then decides before the settlement date that it no longer wants to maintain such a position. It can close out its position by:

• A) buying an identical futures contract.
• B) selling an identical futures contract.
• C) buying a futures contract with a different settlement date.
• D) selling a futures contract for a different amount of currency.
• E) purchasing a put option contract in the same currency.

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Definitions:

Frequency Distributions

Showcases how often each different value in a set of data occurs.

Normal Distributions

A distribution that resembles the shape of a bell, symmetrically centered around the average, indicating that values close to the mean are more commonly observed than those further away from the mean.

Skewed

Describes a distribution of data that is asymmetrical, where the bulk of the values lie on one side of the mean, either to the right (positive skew) or to the left (negative skew).

Frequency Distributions

An arrangement of data that outlines the number of times each unique value or range of values appears.