Question

If you expect the euro to depreciate, it would be appropriate to ____ for speculative purposes. Question 7 options: sell a euro call and sell a euro put buy a euro call and buy a euro put buy a euro call and sell a euro put sell a euro call and buy a euro put

Answer 1

If you expect the euro to depreciate, it would be appropriate to sell a euro call and buy a euro put for speculative purposes.

Explanation:

The depreciation of any currency can occur due to some of the following reasons such as a difference in interest rates, economy, instability politically, etc. When the inflation rate of any country increases this will also cause currencies to depreciate.

In the European option, there are two terms Euro call and  Euro put. Euro call helps the investor to buy an asset and the Euro puts helps the investor to sell an asset. When you anticipate that the euro may depreciate, it would be appreciable to sell a euro call and buy a euro put for speculative purposes.