The Forward Market

question 94

Multiple Choice

The forward market

• A)involves contracting today for the future purchase of sale of foreign exchange at the spot rate that will prevail at the maturity of the contract.
• B)involves contracting today for the future purchase of sale of foreign exchange at a price agreed upon today.
• C)involves contracting today for the right but not obligation to the future purchase of sale of foreign exchange at a price agreed upon today.
• D)none of the above

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Definitions:

Liability Account

An accounting record that captures the amounts a company owes to creditors.

Creditors

Creditors are individuals or entities to whom a company owes money for goods or services that have been provided.

Asset Account

An account on a company's balance sheet that represents a resource with economic value that an entity owns or controls.