If the Foreign Exchange Market Is Efficient,the Forward Exchange Rate

question 36

Multiple Choice

If the foreign exchange market is efficient,the forward exchange rate would differ from the expected future spot exchange rate only by an ________.

• A) Strike price
• B) Exposure risk
• C) Future spot exchange rate
• D) Risk premium

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Definitions:

Profit Maximizing

The process or strategy of setting production levels or prices to achieve the highest possible profit given production costs and market conditions.

Price

The amount of money required to purchase a good, service, or asset.

Green Ink Pads

Small, flat surfaces soaked with green ink used for stamping or printing purposes.

Marginal Revenue

The supplementary earnings received from the sale of one extra unit of a good or service.