Question
On Tuesday morning, an investor takes a long (Buy) position in a India Rupees futures contract that matures on Thursday afternoon. The agreedupon price is
On Tuesday morning, an investor takes a long (Buy) position in a India Rupees futures contract that matures on Thursday afternoon. The agreedupon price is INR 72.5 = 1 USD for USD 84500. At the close of trading on Tuesday, the futures price has risen to INR 72.6 = 1 USD. At Wednesday close, the price falls to to INR 72.55 = 1 USD. At Thursday close, the price falls to INR 72.35 = 1 USD, and the contract matures. The investor takes delivery of the Indian Rupees at the prevailing price of INR 72.35 = 1 USD.
Answer the following 2 questions based on the information given above.
How much will the investor will pay on Wednesday closing price ?
What will be the profit/loss made by the investor on the above contract?
Which of the following option can be an indicator for Appreciation of EUR to OMR?
a.
Spot rate of OMR/EUR is equal to future rate of EUR/OMR
b.
Spot rate of EUR/OMR is equal to future rate of OMR/EUR
c.
Future rate of OMR/EUR is less than Spot rate of OMR/EUR
d.
Future rate of EUR/OMR is greater than spot rate of EUR/OMR
e.
None
The currency value of a country with low return on investment will be _________________
a.
Appreciated
b.
Depreciated
c.
No change in value of currency
d.
Forward premium
The most important difference between futures and forward contracts are based on ______________
a.
Terms of contract
b.
Returns
c.
forex Rates
d.
Protection against fluctuating rates
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