When a Currency Trades at a Discount in the Forward

question 72

Multiple Choice

When a currency trades at a discount in the forward market

• A)the forward rate is less than the spot rate.
• B)the forward rate is more than the spot rate.
• C)the forward exchange rate is less than one dollar .
• D)the exchange rate is less than it was yesterday.

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Definitions:

Binding Contract

A legal agreement between parties that is enforceable by law, where each party has specific obligations.

Agreement

A mutual understanding between two or more parties about their respective rights and duties regarding past or future performances.

Offer

An offer is a proposal presented by one party to another with the intention of entering into a binding agreement, subject to acceptance by the receiving party.

Acceptance

In contract law, the expression of assent to the terms of an offer in such a manner that binds both the offeror and the offeree to the terms of the contract.