Assume That the Forward Rate Is Used to Forecast the Spot

question 12

Multiple Choice

Assume that the forward rate is used to forecast the spot rate. The forward rate of the Canadian dollar contains a 6% discount. Today's spot rate of the Canadian dollar is £0.61. The spot rate forecasted for one year ahead is:

• A) £0.5734.
• B) £0.4032.
• C) £0.5467.
• D) £0.4982.
• E) none of the above.

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Definitions:

Upward Communication

Communication that flows from subordinates to superiors.

Downward Communication

Communication that flows from superiors to subordinates.

Horizontal Communication

The exchange of information, ideas, or messages among individuals or groups at the same level in an organization.

Pelz Effect

Subordinates feel more satisfied in their jobs the more their supervisors are able to influence higher-level decisions.