If the Forward Rate for a Foreign Currency Is Less

question 67

True/False

If the forward rate for a foreign currency is less than the spot rate, the foreign currency is selling at a forward premium.

---

Definitions:

Par Value

The nominal or face value of a stock or bond as stated by the issuing company.

Cash Interest Payment

The actual cash paid by a borrower to a lender or bondholder as compensation for the use of borrowed money, usually at set intervals.

Bond Exchange

The process of trading bonds in the financial market, where investors buy and sell debt securities issued by entities like governments and corporations.

Market Rate of Interest

The prevailing rate of interest observed in the marketplace for loans and investments.