Suppose That the One-Year Forward Rate on Pounds Is $1

question 62

Multiple Choice

Suppose that the one-year forward rate on pounds is $1.75£. Given no arbitrage opportunities,this implies that traders expect:

• A) the spot rate to be $1.75£ in one year.
• B) the spot rate to be greater than $1.75£ in one year.
• C) the spot rate to be less than $1.75£ in one year.
• D) the spot rate to be greater than or equal to $1.75£ in one year.
• E) the spot rate to be less than or equal to $1.75£ in one year.

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Definitions:

Marketing Firm

An organization specialized in creating, implementing, and managing marketing strategies and campaigns for its clients to enhance their market presence.

Four Ps

The marketing mix concept that consists of Product, Price, Place, and Promotion, used to guide business marketing strategies.

Marketing

The activities and processes for creating, communicating, delivering, and exchanging offerings that have value for customers and society at large.

Monetary Price

The specific amount of money required to purchase a product or service.