If a Speculator Expects That the Fed Will Intervene by Exchanging

question 65

Multiple Choice

If a speculator expects that the Fed will intervene by exchanging euros for U.S. dollars, she would most likely ____ to capitalize on this intervention.

• A) purchase euro put options
• B) purchase euro futures contracts
• C) purchase yen call options
• D) sell U.S. Treasury bonds

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Definitions:

Bond Exchange

The process of trading bonds in the financial markets or swapping one bond for another to achieve better investment goals.

Carrying Cost

The total cost associated with holding inventory, including storage, insurance, taxes, depreciation, and opportunity costs, among others.

Setup Cost

The expenses incurred in preparing equipment or processes for manufacturing an order or batch of products.

Annual Demand

The total quantity of a product or service that consumers are willing and able to purchase over a year.