The Following Are the Prices in the Foreign Exchange Market

question 55

Multiple Choice

The following are the prices in the foreign exchange market between the U.S. dollar and a foreign currency (fc) . Spot 0.6335US$/fc; three-month forward 0.6375US$/fc. What was the discount or premium on three-month forward for the foreign currency?

• A) 0.63% premium
• B) 0.40% premium
• C) 0.63% discount
• D) 0.40% discount

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Definitions:

Investing Activities

Transactions related to the acquisition or sale of long-term assets and investments.

Noncurrent Assets

Assets intended for long-term use and not expected to be converted into cash within one year, such as equipment, real estate, and patents.

Direct Method

A cash flow statement reporting approach that lists major outgoing payments and incoming receipts during a period.

Operating Activities

Activities directly related to the primary business operations of a company, including the production, distribution, and sale of goods and services.