If a Dollar Will Buy Fewer Units of a Foreign

question 43

True/False

If a dollar will buy fewer units of a foreign currency in the forward market than in the spot market, then the forward currency is said to be selling at a premium to the spot rate.

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Definitions:

Object Permanence

The understanding, typically developed in infancy, that objects continue to exist even when they cannot be observed or heard.

Sensorimotor Period

In Piaget’s theory, the period of cognitive development from birth to about 2 years, in which the child has not yet achieved object permanence.

Egocentrism

A cognitive bias that makes an individual unable to understand or assume any perspective other than their own.

A-not-B Effect

A cognitive phenomenon observed in infants where they repeatedly reach for an object at a place (A) where it was previously found, even after seeing it moved to a new location (B).