The FX Rate at the Point Where the Demand and Supply

question 24

Multiple Choice

The FX rate at the point where the demand and supply curves for a currency intersect is called a/an:

• A) balanced exchange rate.
• B) equilibrium exchange rate.
• C) intersection exchange rate.
• D) stable exchange rate.

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Definitions:

Spot Market

A public market for trading financial instruments or commodities that are delivered immediately.

Trade Settled

The completion of a securities transaction when the seller delivers the security to the buyer and receives payment in return.

Purchasing Power Parity

An economic theory that compares different countries' currencies through a "basket of goods" approach, to assess relative currency value.

Forward Rate

The forward rate is the agreed-upon interest rate for a financial transaction that will occur at a future date, often used in the context of foreign exchange and bonds.