You enter into a forward contract to take delivery of 1 million euros 3 months from now.What happens to the price you will pay at expiration if marks depreciate during the contract?
A) Your price will increase.
B) Your price will decrease.
C) Your price was fixed at the onset of the contract.
D) Your price was fixed, and you will receive correspondingly more marks due to the depreciation.

Question

Quizplus · Accepted Answer

The price in a forward contract is fixed at the onset of the contract, so it does not change regardless of currency depreciation.

You Enter into a Forward Contract to Take Delivery of 1