The Forward Rate in a Forward Contract

question 37

Multiple Choice

The forward rate in a forward contract

• A)​is the spot rate at the expiration date of the contract.
• B)​changes as the spot rate changes.
• C)​is said to be at a discount if it exceeds the spot rate at the inception of the contract.
• D)​None of the above are true.

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Definitions:

Confidence Interval

A range of values, derived from the sample data, within which we can say with a certain level of confidence that the true population parameter lies.

Sample Size

The number of observations or subjects used in a study or experiment, critical for determining the study's reliability and representativeness.

Population Deviation

Refers to the measure of dispersion from the mean in a population data set, indicating the average distance from the mean for all population values.

Population Mean

The average of a set of values or measurements in the entire population.