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.

---

Definitions:

Cash Dividend Payment

A distribution of a company's earnings declared by the board of directors to its shareholders in the form of cash.

Financing Activities

Financing activities are transactions between a company and its creditors or investors, including issuing equity, paying dividends, and obtaining or repaying loans, which are used to fund the company's operations or expansions.

Statement Of Cash Flows

A financial statement that provides aggregate data regarding all cash inflows a company receives from its ongoing operations and external investment sources, as well as all cash outflows that pay for business activities and investments during a given period.

Cash Flow Ratio

A liquidity ratio that measures a company's ability to cover its short-term liabilities with its cash flows from operations.