Which Statement Is FALSE

question 30

Multiple Choice

Which statement is FALSE?

• A) All arbitrage involves a degree of exchange rate risk.
• B) Speculation involves a risk of loss if exchange rates move in the opposite direction to that expected.
• C) Foreign exchange swaps may be viewed as combinations of spot and forward contracts.
• D) Currency options are especially useful when a player does not want to be locked in to buying or selling a currency at a future time.

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Definitions:

Marginal Product

Marginal product refers to the additional output resulting from using one more unit of a production input, such as labor or capital, holding other inputs constant.

Average Product

The output per unit of input, calculated by dividing total output by the total quantity of inputs.

Labor

The effort by humans to produce goods or services in exchange for wages or other compensation.

Marginal Product

The additional output produced by using one more unit of a production input, holding all other inputs constant.