If the Futures Rate Is Lower Than the Forward Rate

question 65

True/False

If the futures rate is lower than the forward rate, astute investors would attempt to simultaneously buy futures and sell forward. Such actions would place downward pressure on the futures price and upward pressure on the forward rate.

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Definitions:

Norms

Established standards of behavior maintained by a society or group that guide the actions of its members.

Cultural Imperialism

The dominance of one culture over another, historically often through colonization, which imposes its values, practices, and way of life onto another culture.

American Cultural Values

The set of core beliefs and ideals that significantly influence the social behavior and norms in the United States, such as individualism, freedom, and competitiveness.

Western Cultural Imperialism

The domination of Western cultural values and practices over those of other cultures, often leading to cultural homogenization.