If a Foreign Currency Is Quoted in American Terms (The

question 22

Multiple Choice

If a foreign currency is quoted in American terms (the direct quote) and the forward rate for a foreign currency is less than the spot rate, the foreign currency is selling at a ________.

• A)forward premium
• B)backward discount
• C)backward premium
• D)forward discount

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Definitions:

Permanent Capital

The portion of a company's capital that is not expected to be paid back or withdrawn within a year, including equity and long-term debt.

Market Value

Market value is the current price at which an asset or service can be bought or sold in a marketplace.

Common Stock Dividend Distributable

A liability on the balance sheet representing the amount of dividends declared by a company but not yet paid to shareholders.

Paid-In Capital

Section of stockholders’ equity representing what stockholders have invested into the corporation.