There Is a Specified Limit of Amount for the Forward

question 12

True/False

There is a specified limit of amount for the forward contracts that can be written between any two countries.

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Definitions:

Default Risk Premium

The additional return that investors require to compensate them for the risk of default by the borrower.

Par Value

The face value of a bond or stock, representing the amount that the issuer agrees to pay at maturity or the base value of a stock set by the issuing company.

Coupon Rate

The interest rate stated on a bond or other fixed-income security, representing the periodic payment to bondholders, usually expressed as a percentage of the principal.

Yield to Maturity

Yield to maturity is the total return anticipated on a bond if it is held until it matures, including all interest payments and any gain or loss if the bond was purchased at a discount or premium to its face value.