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:

Second Law

Typically refers to the Second Law of Thermodynamics, which states that the entropy of an isolated system always increases.

Concentration Gradient

The gradual difference in the concentration of solutes in a solution between two regions, often leading to diffusion.

Hypotonic

Referring to a solution that has a lower concentration of solutes relative to another solution, thereby causing water to flow into the cell by osmosis.

Hypertonic

A solution that has a higher solute concentration compared to another solution, leading to osmosis out of the cell.