Dollar spot rate will appreciate over the next six months

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Reference no: EM131560811

A foreign exchange speculator who expects that the Euros per US Dollar spot rate will appreciate over the next six months by more than what today's six-month Euros per US Dollar forward rate is projecting would

-Sign today a 6 month forward contract to buy Euros at today's 6 month Euros per US Dollar forward rate. Six months from now, speculator will execute the forward contract and then sell the Euros at the spot rate prevailing at that time.

-Buy Euros today at today's spot rate, hold them in liquid form for six months and then sell them six months from now at the then Euros per US Dollar spot rate.

-Sign today a 6 month forward contract to sell Euros at today's six-month Euros per US Dollar forward rate. Six months later, speculator will purchase Euros at the then spot rate and then execute the forward contract.

-Sign today a 6 month forward contract to sell US Dollars at today's 6 month US Dollars per Euro forward rate. Six months from now, speculator will purchase US Dollars at the then prevailing spot rate and then execute the forward contract.

-None of the above.

Reference no: EM131560811

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