When Projecting Cash Flows for the Pro Forma Cash Flow

question 67

True/False

When projecting cash flows for the pro forma cash flow statement,it is important to be conservative in the estimates. 

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Definitions:

Forward Rate

The predetermined price for a transaction that will occur at a specific future date, used in the context of currency and interest rate markets.

Interest Rate Parity

A theory that suggests the difference in interest rates between two countries is equal to the differential between the forward exchange rate and the spot exchange rate.

Nominal Rate

The interest rate before adjustments for inflation; essentially, the face value rate of interest.

Inflation

How fast the general price index for merchandise and services escalates, corroding the purchasing strength.