CFA Level I sample question

CFA Level I Derivative Benefits, Risks, and Issuer and Investor Uses question

Derivatives / Derivative Benefits, Risks, and Issuer and Investor Uses

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Derivatives

Derivative Benefits, Risks, and Issuer and Investor Uses

A U.S. exporter forecasts EUR 50 million of sales receipts in six months and sells EUR 50 million forward against the U.S. dollar. Convinced that the euro will depreciate more than the forward rate implies, the treasurer then increases the total forward sale to EUR 90 million. The additional EUR 40 million forward position is best described as:

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