In the Absence of Transactions Costs,for the Same Maturity and Currency

question 16

Multiple Choice

In the absence of transactions costs,for the same maturity and currency:

• A) the futures price is always higher than the forward rate.
• B) the forward rate is always higher than the futures price.
• C) the futures price and the forward rate are the same.
• D) the futures price and the forward rate are not related.

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Definitions:

Multivariate Analysis

A set of statistical techniques used to analyze data that arises from more than one variable.

SEM

Standard Error of the Mean, a statistic that measures the precision with which the sample mean represents the population mean.

Path Analysis

A specialized kind of regression analysis used in structural equation modeling to describe the directed dependencies among a set of variables.

Factor Analysis

A technique utilized to identify underlying relationships between measured variables through the analysis of linear combinations.