Assuming a Flat Yield Curve in Both Currencies, When Quoting

question 48

Multiple Choice

Assuming a flat yield curve in both currencies, when quoting a 1- to 2-month forward FX time option price in a currency pair trading at a discount to a customer:

• A) you would take as bid rate the bid side of the 2-month forward and as offered rate the offered side of the 1-month forward
• B) you would take as bid rate the offered side of the 2-month forward and as offered rate the bid side of the 1-month forward
• C) you would take as bid rate the offered side of the 1-month forward and as offered rate the offered side of the 2-month forward
• D) you would take as bid rate the bid side of the 1-month forward and as offered rate the bid side of the 2-month forward

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Definitions:

Waugh and Norman

Refer to psychologists who proposed the primary memory and secondary memory model, focusing on how information is stored and recalled.

Probe Digit Task

A cognitive task where participants must remember a list of digits and then respond to cues or probes, testing memory and attention.

Presentation Rates

The speed or frequency at which information is presented or delivered during an experiment or learning session.

Cognitive Psychologists

Professionals who study mental processes including how people think, perceive, remember, and learn.