A Foreign-Exchange Contract That Is an Agreement Between Two Parties

question 77

Multiple Choice

A foreign-exchange contract that is an agreement between two parties to buy or sell a particular currency at a particular price at a particular date in the future as specified in a standardized contract to all participants in the specified market is known as a(n) ________.

• A) spot contract
• B) forward contract
• C) futures contract
• D) equity currency contract

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Definitions:

Invisible Hand

A metaphor for the self-regulating nature of the marketplace that guides individuals to unintentionally benefit society through the pursuit of their own interests.

Adam Smith

An 18th-century Scottish economist and philosopher, best known for his works on the principles of free market economics.

Pure Capitalism

An economic system characterized by private ownership of the means of production and the creation of goods or services for profit without governmental interference.

Economic System

The set of mechanisms and institutions that resolve the what, how, and for whom questions