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Question 1 Eurocurrency futures are: derivatives based on foreign currency exchange rates short-term interest rate derivatives...

Question 1

Eurocurrency futures are:

derivatives based on foreign currency exchange rates

short-term interest rate derivatives based on LIBOR or other similar rates.

agreements to purchase specific foreign currencies at specific rates at specific dates in the future.

derivatives based on the law of one price.
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Answer #1

Euro currency futures are derivative instruments which are agreements to purchase specific currencies at specific rates on the specific dates as specified in the agreement in the future. This is used as a risk mitigation strategy against foreign currency fluctuation for importers and exporters trading in Euro currency.

Answer is agreements to purchase specific foreign currencies at specific rates at specific dates in the future.

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