Which of the following would result in a profit of a euro futures contract when the euro depreciates?
A) buy a euro futures contract; sell a futures contract after the euro has depreciated.
B) sell a euro futures contract; buy a futures contract after the euro has depreciated.
C) buy a euro futures contract; buy an additional futures contract after the euro has depreciated.
D) none of the above would result in a profit when the euro depreciates.

Question

Quizplus · Accepted Answer

Selling a euro futures contract before the euro depreciates and then buying it back after it has depreciated will result in a profit. This is because the contract was sold at a higher price than it was bought back at, due to the depreciated euro. Buying a euro futures contract (choice A and C) would only result in a profit if the euro appreciates, not depreciates. Choice D is incorrect as it is possible to profit from a depreciating euro with the correct trading strategy.

Which of the Following Would Result in a Profit of a Euro