Assume That the Dollar Is Selling at a Premium on the 30-Day

question 98

Multiple Choice

Assume that the dollar is selling at a premium on the 30-day dollar/euro forward market.Which of the following is true of the foreign exchange dealers' market's expectations about the dollar over the next 30 days?

• A)The dollar will depreciate against the euro.
• B)The market is undecided about the direction of currency movement.
• C)The dollar will appreciate against the euro.
• D)The dollar/euro exchange rate will be steady.
• E)The dollar will buy more euros with a spot exchange than with a 30-day forward exchange.

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Definitions:

Accommodation

In psychology, the process of adjusting one's cognitive structures to fit new information; in optics, the adjustment of the eye's lens to focus on objects at various distances.

Existing Schemas

Preexisting mental structures or frameworks that help individuals organize and interpret information.

Developmental Changes

The transformation or evolution of physical, cognitive, psychological, and social capabilities and functioning over the course of a person's lifetime.

Sensorimotor Stage

A stage in Piaget's theory of cognitive development, occurring from birth to about 2 years of age, where infants learn about the world through their senses and motor actions.