Which of the Following Statements Is Correct

question 115

Multiple Choice

Which of the following statements is correct?

• A)When the interest rate is lower in the commodity currency, it is offered at a forward premium.
• B)When the interest rate is higher in the commodity currency, it is offered at a forward premium.
• C)When the interest rate is higher in the terms currency, the commodity currency is offered at a forward discount.
• D)When the interest rate is higher in the terms currency, it is offered at a forward premium.
• E)When the interest rate is lower in the terms currency, it is offered at a forward discount.

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Definitions:

Monthly Production Volume

The quantity of goods or products manufactured or produced in a factory or plant over the course of a month.

Fixed Manufacturing Cost

Expenses that do not change with the level of production, such as rent, salaries, and insurance, required to operate a manufacturing facility.

Mixed Cost

A cost that contains both variable and fixed cost elements; it changes with the level of activity but not in direct proportion.

Least-squares Regression

A statistical method used to determine the line of best fit by minimizing the squares of the differences between observed and predicted values.