Currency Forwards Are Good Indicators of the Future Spot Rate

question 47

Multiple Choice

Currency forwards are good indicators of the future spot rate of a currency because they:

• A)require that all parties trading in that currency at a specific future date value the currency at the same amount.
• B)contractually bind entities to transaction business in the currency in the future at the current spot rate.
• C)control what the future spot rate of the currency will be.
• D)represent the estimation of future currency values by entities that have contracted for those rates in future transactions.

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Definitions:

Sedimentary Deposit

Accumulation of minerals and organic particles that have been transported, settled, and compressed over time.

Breccia

A rock composed of broken fragments of minerals or rock cemented together by a fine-grained matrix.

Rock Characteristics

The inherent properties and features of rock, including texture, mineral content, and permeability among others.

Angular Clasts

Angular clasts are pieces of rock that have sharp edges and points, indicating they have not been traveled far from their source because they have not been significantly worn down by erosion.