If an Investor Can Obtain More of a Foreign Currency

question 36

True/False

If an investor can obtain more of a foreign currency for a dollar in the forward market than in the spot market,then the foreign currency is said to be selling at a discount to the spot rate.

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Definitions:

Precautionary Cash Balances

Precautionary cash balances refer to money held by both businesses and individuals to meet unexpected expenses or financial emergencies.

Unexpected Expenditures

Expenses that were not planned or budgeted for, often requiring immediate payment.

Risk-Averse

A description of an investor or decision-maker who prefers to minimize uncertainty or potential loss, favoring safer over riskier options.

Financial Intermediary

An institution that acts as a middleman between savers and borrowers, including banks, investment companies, and insurance companies.