If the Forward Price of a Currency Contract Is Lower

question 3

Multiple Choice

If the forward price of a currency contract is lower than the spot rate,the currency is said to be at a

• A) forward discount.
• B) forward premium.
• C) future expected exchange rate.
• D) forward swap rate.

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Definitions:

Trade Surplus

Occurs when a country's exports exceed its imports, indicating a positive balance of trade.

Neo-Mercantilism

A trade theory which suggests that trade generates wealth for a country with a trade surplus, with emphasis on rapid economic development.

Positive Balance

A financial situation where assets exceed liabilities, indicating a surplus.

Protectionist Actions

Measures taken by a government to protect its domestic industries from foreign competition by imposing tariffs or quotas.