Forward Rate Agreements Can Be Used for Speculative Purposes

question 69

Multiple Choice

Forward rate agreements can be used for speculative purposes.If one believes rates will be less than the agreement rate,

• A)take a short position in a forward rate agreement.
• B)the purchase of a FRA is the suitable position.
• C)the sale of a FRA is the suitable position.
• D)take a long position in the spot market.

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Definitions:

UCS Cortical Center

A hypothetical or proposed brain area responsible for processing unconditioned stimuli, which automatically trigger reflexive responses.

Unconditioned Response

A natural, unlearned reaction to an unconditioned stimulus, such as salivating when tasting food.

Analgesia

The inability to feel pain while still conscious, often induced through use of medication or psychological techniques.

Hyperalgesia

An increased sensitivity to pain, which can be caused by damage to nociceptors or peripheral nerves.