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:

Dependent Variable

In research, it's the outcome variable that is influenced by the independent variable.

Interaction Effect

Occurs when the effect of one independent variable on the dependent variable varies depending on the level of another independent variable.

Main Effect

In an experimental design, the direct impact of an independent variable on a dependent variable, disregarding the effects of other variables.

Simple Effect

The effect of one independent variable at a particular level of another independent variable in the context of more complex experimental designs.