Which of the Following Is Correct When Contracting Ahead in the Forward

question 70

Multiple Choice

Which of the following is correct when contracting ahead in the forward exchange market?

• A) At contract close you pay either the forward rate that was contracted or the then-current rate.
• B) Contracting ahead is always cheaper than waiting to pay spot rates.
• C) Your cost is locked in from the beginning of the contract, regardless of market changes.
• D) Paying spot price is safer than contracting forward.

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Definitions:

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A structured communication technique originally developed as a systematic, interactive forecasting method which relies on a panel of experts.

Groupthink

A psychological phenomenon in which the desire for harmony or conformity in a group results in an irrational or dysfunctional decision-making outcome.

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A measure that provides insights into the efficiency, performance, or productivity of an organization's operations.

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The total amount of workers that employers want to hire at a given wage rate and period.