A Foreign Currency ________ Gives the Purchaser the Right, Not

question 58

Multiple Choice

A foreign currency ________ gives the purchaser the right, not the obligation, to buy a given amount of foreign exchange at a fixed price per unit for a specified period.

• A) future
• B) forward
• C) option
• D) swap

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Definitions:

Equation of Exchange

An economic formula representing the relationship between the money supply, its velocity (rate of circulation), the price level, and the number of transactions over a period.

Money Supply

The total amount of monetary assets available in an economy at a specific time, including cash, coins, and balances held in checking and savings accounts, influencing inflation and economic activity.

Price Level

An index that measures the average price of consumer goods and services, reflecting the purchasing power of a country's currency.

Foreign Exchange Rate

The price at which one currency can be exchanged for another in the international currency markets.