Speculators in currency future markets are mcq

The two major categories of traders are hedgers and speculators. Although these two groups trade in the futures market, they are trying to accomplish very different objectives. Hedgers trade not only in futures contracts but also in the commodity, equity, or product represented by the contract. They trade futures to secure the future price of […]

A speculator is any individual or firm that accepts risk in order to make a profit. Speculators can achieve these profits by buying low and selling high. But in the case of the futures market, they could just as easily sell first and later buy at a lower price. Obviously, this profit objective is easier said than done. By definition, speculators in currency futures markets trade only to make profits and not for fundamental purposes such as to hedge foreign exchange risk. Since they have no other reason to trade futures, we would expect that if any group of agents is to be profitable in currency markets, it should be speculators. Readers Question: Can you please explain how speculators can gain a profit from a speculative attack on currencies? A speculative attack on a currency occurs when ‘investors’ believe that the value of a currency is over-valued and therefore, they sell that currency in anticipation of it falling and buy another currency (e.g. sell their holdings of Pound Sterling and buy Euros). b) The futures market and the forward market are mainly used for hedging. c) The futures market is mainly used by speculators while the forward market is mainly used for hedging. d) The futures market and the forward market are mainly used for speculating. 18. The difference between the value of a call option and a put option with the same Speculators are people who analyze and forecast futures price movement, trading contracts with the hope of making a profit. Speculators put their money at risk and must be prepared to accept outright losses in the futures market. Speculators earn a profit when they offset futures contracts to their benefit. Speculators attempt to predict price changes and extract profit from the price moves in an asset. They may utilize leverage to magnify returns (and losses), although this is a personal choice of the individual. There are different types of speculators in a market. Chapter 20 FUTURES Multiple Choice Questions Understanding Futures Markets 1. Spot markets are: a. for a limited number of commodities. b. for immediate delivery c. for future delivery. d. markets designed to attract speculators. 2. A forward contract differs from a futures contract in that: 3. Futures contracts are regulated by the: 4. A

By definition, speculators in currency futures markets trade only to make profits and not for fundamental purposes such as to hedge foreign exchange risk. Since they have no other reason to trade futures, we would expect that if any group of agents is to be profitable in currency markets, it should be speculators.

Speculation and Hedging in the Currency Futures Markets: Are They Informative to the Spot Exchange Rates Aaron Tornell * Chunming Yuan† University of California, Los Angeles University of Maryland, Baltimore County September, 2009 Abstract This paper presents an empirical analysis investigating the relationship between The Pros and Cons of Speculation in Commodity Futures. Share Pin Email Speculators add liquidity to markets and so long as they remain within regulatory rules these participants bring a great deal to commodity markets. The liquidity provided by speculators serves to grease the wheels of markets causing them to operate efficiently for all Participants that had purchased currency futures contracts incurred large losses. One floor broker responded to the effects of the Fed's intervention by immediately selling 300 futures contracts on British pounds (with a value of about $30 million). Such actions caused even more panic in the futures market. a. A _____ transaction in the foreign exchange market requires delivery of foreign exchange at some future date. A) spot A common type of swap transaction in the foreign exchange market is the _____ where the dealer buys the currency in the spot market and sells the same amount back to the same bank in the forward market. Speculators and MCQ on International Finance 1. If portable disk players made in China are imported into the United States, the Chinese manufacturer is paid with a) international monetary credits. b) dollars. c) yuan, the Chinese currency. d) euros, or any other third currency. 2. In the foreign exchange market, the _____ of one country is traded for the _____

15) To say that the forward market lacks liquidity means that. (a) forward contracts (c) speculation. (c) used in both financial and foreign exchange markets.

Speculators in foreign exchange markets do all of the following except ? Speculators in foreign exchange markets do all of the following except ? A. attempt to profit by trading on expectations about future currency prices Economics Mcqs for Lecturer & Subject Specialist Exams. Speculators make up a small part of the futures market. These speculators in the currency futures market tend to take advantage of the volatility that is present. Thus, currency futures speculators or day traders can go long or short on an intraday basis and reap profits. Solution(By Examveda Team) Speculators are typically sophisticated risk-taking investors with expertise in the markets in which they are trading; they usually use highly leveraged investments, such as futures and options. A speculator is any individual or firm that accepts risk in order to make a profit. Speculators can achieve these profits by buying low and selling high. But in the case of the futures market, they could just as easily sell first and later buy at a lower price. Obviously, this profit objective is easier said than done. By definition, speculators in currency futures markets trade only to make profits and not for fundamental purposes such as to hedge foreign exchange risk. Since they have no other reason to trade futures, we would expect that if any group of agents is to be profitable in currency markets, it should be speculators. Readers Question: Can you please explain how speculators can gain a profit from a speculative attack on currencies? A speculative attack on a currency occurs when ‘investors’ believe that the value of a currency is over-valued and therefore, they sell that currency in anticipation of it falling and buy another currency (e.g. sell their holdings of Pound Sterling and buy Euros). b) The futures market and the forward market are mainly used for hedging. c) The futures market is mainly used by speculators while the forward market is mainly used for hedging. d) The futures market and the forward market are mainly used for speculating. 18. The difference between the value of a call option and a put option with the same

Speculators are people who analyze and forecast futures price movement, trading contracts with the hope of making a profit. Speculators put their money at risk and must be prepared to accept outright losses in the futures market. Speculators earn a profit when they offset futures contracts to their benefit.

Speculators are people who analyze and forecast futures price movement, trading contracts with the hope of making a profit. Speculators put their money at risk and must be prepared to accept outright losses in the futures market. Speculators earn a profit when they offset futures contracts to their benefit. Speculators attempt to predict price changes and extract profit from the price moves in an asset. They may utilize leverage to magnify returns (and losses), although this is a personal choice of the individual. There are different types of speculators in a market. Chapter 20 FUTURES Multiple Choice Questions Understanding Futures Markets 1. Spot markets are: a. for a limited number of commodities. b. for immediate delivery c. for future delivery. d. markets designed to attract speculators. 2. A forward contract differs from a futures contract in that: 3. Futures contracts are regulated by the: 4. A The two major categories of traders are hedgers and speculators. Although these two groups trade in the futures market, they are trying to accomplish very different objectives. Hedgers trade not only in futures contracts but also in the commodity, equity, or product represented by the contract. They trade futures to secure the future price of […] The Differences Between Hedgers and Speculators in Futures Markets February 2, 2018 by Daniels Trading | Futures 101 When you look at futures trading, it may appear that there is a never-ending tug of war between the profit-seeking speculators and the ever-so-careful hedgers. Using weekly data on the positions of different types of participants in currency futures markets we present evidence that suggests speculators are profitable.

Speculators make up a small part of the futures market. These speculators in the currency futures market tend to take advantage of the volatility that is present. Thus, currency futures speculators or day traders can go long or short on an intraday basis and reap profits.

Using weekly data on the positions of different types of participants in currency futures markets we present evidence that suggests speculators are profitable. Speculation and Hedging in the Currency Futures Markets: Are They Informative to the Spot Exchange Rates Aaron Tornell * Chunming Yuan† University of California, Los Angeles University of Maryland, Baltimore County September, 2009 Abstract This paper presents an empirical analysis investigating the relationship between The Pros and Cons of Speculation in Commodity Futures. Share Pin Email Speculators add liquidity to markets and so long as they remain within regulatory rules these participants bring a great deal to commodity markets. The liquidity provided by speculators serves to grease the wheels of markets causing them to operate efficiently for all Participants that had purchased currency futures contracts incurred large losses. One floor broker responded to the effects of the Fed's intervention by immediately selling 300 futures contracts on British pounds (with a value of about $30 million). Such actions caused even more panic in the futures market. a. A _____ transaction in the foreign exchange market requires delivery of foreign exchange at some future date. A) spot A common type of swap transaction in the foreign exchange market is the _____ where the dealer buys the currency in the spot market and sells the same amount back to the same bank in the forward market. Speculators and MCQ on International Finance 1. If portable disk players made in China are imported into the United States, the Chinese manufacturer is paid with a) international monetary credits. b) dollars. c) yuan, the Chinese currency. d) euros, or any other third currency. 2. In the foreign exchange market, the _____ of one country is traded for the _____

Participants that had purchased currency futures contracts incurred large losses. One floor broker responded to the effects of the Fed's intervention by immediately selling 300 futures contracts on British pounds (with a value of about $30 million). Such actions caused even more panic in the futures market. a. A _____ transaction in the foreign exchange market requires delivery of foreign exchange at some future date. A) spot A common type of swap transaction in the foreign exchange market is the _____ where the dealer buys the currency in the spot market and sells the same amount back to the same bank in the forward market. Speculators and MCQ on International Finance 1. If portable disk players made in China are imported into the United States, the Chinese manufacturer is paid with a) international monetary credits. b) dollars. c) yuan, the Chinese currency. d) euros, or any other third currency. 2. In the foreign exchange market, the _____ of one country is traded for the _____ Readers Question: Can you please explain how speculators can gain a profit from a speculative attack on currencies? A speculative attack on a currency occurs when ‘investors’ believe that the value of a currency is over-valued and therefore, they sell that currency in anticipation of it falling and buy another currency (e.g. sell their holdings of Pound Sterling and buy Euros).