If Chinese speculators expect the euro to appreciate against the U.S. dollar, they would:
A. purchase Chinese yuan.
B. purchase U.dollars.
C. purchase euros.
D. use Chinese yuan to buy euros, instantly use the euros to buy U.dollars, and then instantly use the U.dollars to buy Chinese yuan.
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If the spot price of the euro is $1.17 per euro and the 30-day forward rate is $1.10 per euro, and you believe that the spot rate in 30 days will be $1.15 per euro, then you can try to maximize speculative gains by:
A. buying euros in the current spot market and selling euros in 30 days at the future spot rate.
B. signing a forward foreign exchange contract to sell euros in 30 days.
C. signing a forward foreign exchange contract to sell dollars in 30 days.
D. buying dollars in the spot market and selling the dollars in 30 days at the future spot rate.
For an investor who starts with dollars and wants to end up with dollars in the future, which of the following choices is an example of a covered international investment?
A. Sell dollars at the spot rate, invest the proceeds in foreign currency-denominated financial instruments, and sign a forward exchange contract to buy the foreign currency
B. Sell dollars at the spot rate, invest the proceeds in foreign currency-denominated financial instruments, and sign a forward exchange contract to buy dollars
C. Sell dollars at the spot rate, invest the proceeds in foreign currency-denominated financial instruments, and then buy dollars at the future spot rate
D. Buy a dollar-denominated financial asset
For an investor who starts with dollars and wants to end up with dollars in the future, which of the following choices is an example that includes speculating?
A. Sell dollars at the spot rate, invest the proceeds in foreign currency-denominated financial instruments, and sign a forward exchange contract to sell the foreign currency
Buy a dollar-denominated financial asset
C. Sell dollars at the spot rate, invest the proceeds in foreign currency-denominated financial instruments, and sign a forward exchange contract to buy dollars
D. Sell dollars at the spot rate, invest the proceeds in foreign currency-denominated financial instruments, and then buy dollars at the future spot rate
The proportionate difference between the current forward exchange rate value of a currency and its current spot value is the _____ premium.
A. investment
B. frequent exchanger
C. forward
D. currency-option