Forward Discount Is a Condition Under Which the Forward Rate

question 40

True/False

Forward discount is a condition under which the forward rate of one currency relative to another currency is lower than the spot rate.

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Definitions:

Weighted Average

A calculation that takes into account the varying degrees of importance of the numbers in a data set, assigning weights to some of the numbers more than others.

Stock Options

Financial instruments granting the holder the right, but not the obligation, to buy or sell a stock at a specified price within a certain period.

GAAP

Generally Accepted Accounting Principles, which are standards and conventions for financial reporting in the United States.

Compensation Costs

The expenses incurred by a company to pay employees, including salaries, benefits, bonuses, and social security contributions.