Question

If your firm expects the euro to substantially​ depreciate, it could speculate by​ ____ euro call options or​ ____ euros forward in the forward exchange market.

a. selling; selling
b. selling; purchasing
c. purchasing; purchasing
d. purchasing; selling

Answer 1

Answer: selling; selling

Step-by-step explanation:

If a particular firm expects the euro to depreciate, that is the value of the euro will be reduced, such firm will speculate by selling the euro call options or selling the euros forward in the forward exchange market.

This is because such firm will try as much as possible to make as much gain and when there's a speculation about decrease in value, the firm will sell the euro call options.