Suppose That the One-Year Forward Rate on Pounds Is $1

question 62

Multiple Choice

Suppose that the one-year forward rate on pounds is $1.75£. Given no arbitrage opportunities,this implies that traders expect:

• A) the spot rate to be $1.75£ in one year.
• B) the spot rate to be greater than $1.75£ in one year.
• C) the spot rate to be less than $1.75£ in one year.
• D) the spot rate to be greater than or equal to $1.75£ in one year.
• E) the spot rate to be less than or equal to $1.75£ in one year.

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Definitions:

SSRIs

Selective Serotonin Reuptake Inhibitors, a class of drugs commonly used to treat depression and anxiety disorders by increasing serotonin levels in the brain.

Reinforcement

In operant conditioning, what occurs when a behaviour increases in frequency as a result of consistent consequences.

Problem Solving

The process of identifying solutions to specific issues by applying appropriate techniques or knowledge.

Behavioural Activation

A therapy technique focused on helping individuals improve their mood by increasing their engagement in positively reinforcing activities.