If You Are an Importer of Goods and You Need

question 103

Multiple Choice

If you are an importer of goods and you need to make payment for the purchase of inventory before the close of business today,which of the below is the correct term for the exchange rate that you will use?

• A) indirect rate
• B) spot rate
• C) direct rate
• D) forward rate

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Definitions:

Moral Hazard

A situation where one party is more likely to take risks because they do not bear the full consequences of their actions.

Auto Insurance

A policy purchased by vehicle owners to mitigate costs associated with getting into an auto accident or other vehicular damage.

Moral Hazard

Moral Hazard refers to situations where one party is more likely to take risks because the negative consequences of their actions are borne by another party.

Adverse Selection

A situation where asymmetric information leads to the selection of undesirable participants in a contract or agreement, often seen in insurance and financial markets.