Which Method of Trading Currencies Involves the Conversion of One

question 114

Multiple Choice

Which method of trading currencies involves the conversion of one currency into another at one point in time with an agreement to reconvert it back to the original currency at some point in the future?

• A) Forward transaction
• B) Futures transaction
• C) Spot transaction
• D) Swap transaction

---

Definitions:

Operating Income

Earnings before interest and taxes (EBIT), an indicator of a company’s profitability from its core business operations.

Fixed Overhead

Costs that do not change with the level of output, including rent, salaries, and insurance premiums.

Administrative Costs

Expenses that are not directly tied to production or sales, such as office expenses, salaries of administrative personnel, and legal fees.

Incremental Income

The additional income that is generated as a result of a specific business decision or activity.