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The Forward Exchange Rate Minus the Spot Rate Equals the Forward

question 68

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The forward exchange rate minus the spot rate equals the forward margin.


Definitions:

Supply Curve

A graph of the relationship between the price of a good and the quantity supplied.

Real Exchange Rate

A measure that compares the relative prices of goods and services between countries, adjusting for differences in price levels.

Loanable Funds

The money available for borrowing in the financial market.

Equilibrium Rate

The price or point at which the quantity of a good or service supplied matches the quantity demanded.

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