The Forward Rate Market Is Dependent Upon

question 69

Multiple Choice

The forward rate market is dependent upon:

• A) current forward rates exceeding current spot rates.
• B) current spot rates exceeding current forward rates over time.
• C) current spot rates equaling current forward rates, on average, over time.
• D) forward rates equaling the actual future spot rates on average over time.
• E) current spot rates equaling the actual future spot rates on average over time.

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Definitions:

Annual Return

The percentage gain or loss on an investment over a one-year period, reflecting the compound rate of return.

Dividend

A portion of a company's earnings distributed to its shareholders, typically in the form of cash or additional stock.

Preferred Stock

A class of ownership in a corporation that has a higher claim on assets and earnings than common stock and typically dividends that are paid out before those to common stockholders.

Annual Dividend

The total amount of dividend payments a company makes to its shareholders over a single fiscal year.