An Agreement to Exchange Currencies at Some Point in the Future

question 293

Multiple Choice

An agreement to exchange currencies at some point in the future using an agreed-upon exchange rate is called a ____________ trade.

• A) Spot.
• B) Forward.
• C) Swap.
• D) Floating.
• E) Triangle.

---

Definitions:

Probability Density Function

A probability density function is a function that describes the probability of a random variable taking on certain values, used for continuous variables where the probability of any single value is zero.

Normal Approximation

A mathematical method used to approximate the binomial distribution with the normal distribution when the sample size is large and the probability of success is not too close to 0 or 1.

Binomial Distribution

A probability distribution describing the number of successes in a fixed number of binary, independent trials given a specific success probability.

Random Sample

A group selected from a broader population where every individual has the same likelihood of being chosen.