Which of the Following Instances Indicates That the Dollar Is

question 110

Multiple Choice

Which of the following instances indicates that the dollar is selling at a premium on the 30-day forward market?

• A)The spot exchange rate is currently $1 = ×120 and changes to $1 = ×130 after 30 days.
• B)The spot exchange rate is currently $1 = ×120 and changes to $1 = ×110 after 30 days.
• C)The current spot exchange rate is $1 = ×120 and the 30-day forward rate is $1 = ×110 after 30 days.
• D)The current spot exchange rate is $1 = ×120 and the 30-day forward rate is $1 = ×130 after 30 days.
• E)The current spot exchange rate is $1 = ×120 and the 30-day forward rate is $1 = ×120.

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Definitions:

Sales

The total amount of goods or services sold by a company, serving as a major component of its revenue.

Cost-volume-profit Analysis

A method used to determine how changes in costs and volume affect a company's operating income and net income.

Service Companies

Businesses that provide intangible products or services to consumers or other businesses rather than manufacturing goods.

Fixed

Costs that do not change with the level of production or sales activity, such as rent, salaries and insurance.