Which of the Following Statements Holds True for a Forward

question 63

Multiple Choice

Which of the following statements holds true for a forward contract?

• A)It refers to the method of foreign-currency translation in which items in the subsidiaries' financial statements are translated into the currency of the parent corporation at the current exchange rate.
• B)It refers to the company-generated forecast of future spot exchange rates between two trading partners.
• C)It refers to a method of foreign-currency translation that uses exchange rates based on the rate in place when the assets and liabilities were originally acquired or incurred.
• D)It refers to the contract between two parties to buy or sell an asset today.
• E)It refers to an agreement in which a firm agrees to pay a specific rate at the beginning of the contract for delivery at a future date.

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Definitions:

Opportunity Cost

The cost of choosing one option over alternative uses of resources or opportunities.

Inflation

A sustained increase in the general price level of goods and services in an economy over a period of time, leading to a decrease in the purchasing power of currency.

Government Policies

Government policies are the actions and strategies that governments implement to achieve specific objectives, including economic stability, growth, and social welfare.

Efficiency

The ability to achieve a desired result without wasted energy or resources.