The Unbiased Forward Rate Is A

question 7

Multiple Choice

The unbiased forward rate is a:

• A)condition where a future spot rate is equal to the current spot rate.
• B)guarantee of a future spot rate at one point in time.
• C)condition where the spot rate is expected to remain constant over a period of time.
• D)relationship between the future spot rate of two currencies at an equivalent point in time.
• E)predictor of the future spot rate at the equivalent point in time.

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Definitions:

Exercise Price

The price at which the holder of an options contract can buy (call option) or sell (put option) the underlying asset.

Market Price

The current price at which an asset or service can be bought or sold in the marketplace.

Call Premium

The additional amount above the bond's face value that the issuer must pay to redeem it before maturity.

Unexpectedly Announces

Refers to unforeseen news or disclosures by a company that can significantly impact its stock price and investor perceptions.