If a FX dealer buys USD from a client and holds USD on its own account on the expectation of the USD rising in value in the near future,it is taking a:
A) a hold position in the USD.
B) a long position in the USD.
C) a short position in the USD.
D) forward position in the USD.

Question

Quizplus · Accepted Answer

A long position in the USD means the dealer is betting on the USD rising in value, which aligns with the dealer's expectation stated in the question. A hold position in the USD simply means the dealer is not selling the USD immediately, but does not indicate the dealer's expectation of the USD's future value. A short position in the USD means the dealer is betting on the USD decreasing in value, which is the opposite of the dealer's expectation stated in the question. A forward position in the USD refers to entering into a contract to buy or sell USD at a specified future date and price, which is not mentioned in the question. Therefore, B is the best choice with the given information.

If a FX Dealer Buys USD from a Client and Holds