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An investor buys a CME Sterling Currency futures, (with face value of £62,500) at 1.35 when the spot rate is $1.33 per £.(tick size = 0.01c) At expiry the EDSP is 1.38. How many of these statements are correct? I. II. III. The seller delivers £62, 500 and invoices the buyer for $(62,500 x 1.38) = $86, 250. The buyer receives £62, 500 and pays the seller $86, 250. The net price paid by the buyer for £62, 500 is $1.35 per £.

An investor buys a CME Sterling Currency futures, (with face value of £62,500) at 1.35 when the spot rate is $1.33 per £.(tick size = 0.01c) At expiry the EDSP is 1.38. How many of these statements are correct? I. II. III. The seller delivers £62, 500 and invoices the buyer for $(62,500 x 1.38) = $86, 250. The buyer receives £62, 500 and pays the seller $86, 250. The net price paid by the buyer for £62, 500 is $1.35 per £.

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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8) This is an exercise about financial futures. Can you please check the picture and answer the question? Only one option is right (A, B, C, or D).

An investor buys a CME Sterling Currency futures, (with face value of £62,500) at 1.35 when the spot rate is $1.33 per £.(tick size = 0.01c) At expiry the EDSP is 1.38. How many of these statements are correct? I. II. III. The seller delivers £62, 500 and invoices the buyer for $(62,500 x 1.38) = $86, 250. The buyer receives £62, 500 and pays the seller $86, 250. The net price paid by the buyer for £62, 500 is $1.35 per £. A. none. B. 1 only C. 2 only. D. All 3.
Transcribed Image Text:An investor buys a CME Sterling Currency futures, (with face value of £62,500) at 1.35 when the spot rate is $1.33 per £.(tick size = 0.01c) At expiry the EDSP is 1.38. How many of these statements are correct? I. II. III. The seller delivers £62, 500 and invoices the buyer for $(62,500 x 1.38) = $86, 250. The buyer receives £62, 500 and pays the seller $86, 250. The net price paid by the buyer for £62, 500 is $1.35 per £. A. none. B. 1 only C. 2 only. D. All 3.
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