A Forward Exchange Contract Is Being Transacted at a Premium

question 46

Multiple Choice

A forward exchange contract is being transacted at a premium if the current forward rate is

• A)​less than the expected spot rate.
• B)​greater than the expected spot rate.
• C)​less than the current spot rate.
• D)​greater than the current spot rate.

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Definitions:

Pollution

The contamination of the natural environment by harmful substances or energies, often resulting from human activities.

Efficient

The condition in which resources are allocated in a way that maximizes the net benefit to society or achieves an optimal outcome where no one can be made better off without making someone else worse off.

Beneficiaries

Individuals or groups that receive benefits or advantages from something, especially from a trust, insurance policy, or will.

Socially Optimal

A situation in which resources are allocated in the most efficient way from the society's point of view, maximizing total welfare.