Which of the following would result in a profit on a futures contract when the underlying currency depreciates?
A)Buy a futures contract; sell a futures contract aFter the currency has depreciated.
B)Sell a futures contract; buy a futures contract aFter the currency has depreciated.
C)Buy a futures contract; buy an additional futures contract aFter the currency has depreciated.
D)None of the above would result in a profit when the underlying currency of the futures contract depreciates.

Question

Quizplus · Accepted Answer

Selling a futures contract before the currency depreciates and then buying it back at a lower price after it has depreciated will result in a profit. Buying a futures contract before the currency depreciates and then buying an additional futures contract after it has depreciated will result in a loss. Choice A is also incorrect as it suggests selling a futures contract after the currency has depreciated, which would result in a loss. Therefore, B is the only correct choice.

Which of the Following Would Result in a Profit on a Futures