What Condition Is Necessary to Create a Synthetic Forward Contract

question 49

Multiple Choice

What condition is necessary to create a synthetic forward contract?

• A)A hedging position.
• B)Exposure to changes in exchange rates
• C)Interest rate parity
• D)Speculating in the market

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Definitions:

Specific Assets

Assets that are clearly identified and uniquely distinguishable from other assets in terms of type, nature, or usage.

Maturity Date

The Maturity Date is the specific date on which a financial obligation must be paid off or when an investment becomes due for repayment.

Face Value

The nominal value or dollar value printed on a financial instrument, such as a bond or a stock certificate.

Interest Paid

The total amount of interest paid by a borrower to a lender over a particular period for the use of borrowed money.