# Price Movements of Currency Futures Assume that on November 1, the spot rate of the British pound was \$1.58 and the price on a December futures contract was \$1.59. Assume that the pound depreciated during November so that by November 30 it was worth \$1.51. What do you think happened to the futures price over the month of November? Why? If you had known that this would occur, would you have purchased or sold a December futures contract in pounds on November 1? Explain.

FindFind

### International Financial Management

14th Edition
Madura
Publisher: Cengage
ISBN: 9780357130698
FindFind

### International Financial Management

14th Edition
Madura
Publisher: Cengage
ISBN: 9780357130698

#### Solutions

Chapter 5, Problem 17QA
Textbook Problem

## Price Movements of Currency Futures Assume that on November 1, the spot rate of the British pound was \$1.58 and the price on a December futures contract was \$1.59. Assume that the pound depreciated during November so that by November 30 it was worth \$1.51. What do you think happened to the futures price over the month of November? Why? If you had known that this would occur, would you have purchased or sold a December futures contract in pounds on November 1? Explain.

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