Currency Swaps Have Little Relation to Currency Forward Contracts

question 20

True/False

Currency swaps have little relation to currency forward contracts.

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Definitions:

Prior Probabilities

Probabilities that are assigned to events before any empirical data is taken into account, often based on theoretical considerations or past experience.

Multiplication Rule

A principle in probability theory used to find the probability of two independent events occurring simultaneously.

Posterior Probabilities

The revised probabilities of events or hypotheses after taking into account new evidence or information.

Addition Rule

A probability principle stating that the probability of the union of two events equals the sum of their probabilities minus the probability of their intersection.