Which of the Following Statements Is True

question 35

Multiple Choice

Which of the following statements is true?

• A)A very actively traded spot contract is the spot rate agreement (SRA).
• B)A very actively traded spot contract is the futures rate agreement (FRA).
• C)A very actively traded forward contract is the forward rate agreement (FRA), commonly used to lock in the interest rate on shorter term borrowings.
• D)A very actively traded spot contract is the option rate agreement (ORA), commonly used to grant the right to buy or sell an asset at a specified price.

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Definitions:

Variable Expense Ratio

A measurement that indicates the proportion of variable expenses to sales, showing how costs change with sales volume.

Break-even Point

The sales amount where the total income matches the total expenses, leading to neither profit nor loss for the company.

High-low Method

An analytical technique used in accounting and finance to estimate fixed and variable costs associated with business operations based on the highest and lowest levels of activity.

Fixed Cost

Costs that do not vary with the level of production or sales, remaining constant regardless of the amount of goods or services produced or sold.