1. On April 1, the spot price of the British pound was $1.86 and the price of the June futures contract was $1.85. During April the pound appreciated, so that by May 1 it was selling for $1.91. What do you think happened to the price of the June pound futures contract during April? Explain.
2. What are the basic differences between forward and futures contracts? Between futures and options contracts?
3. A forward market already existed, so why was it necessary to establish currency futures and currency options contracts?