Assume That the Forward Rate Is Used to Forecast the Spot

question 76

Multiple Choice

Assume that the forward rate is used to forecast the spot rate. The forward rate of the Canadian dollar contains a 6% discount. Today's spot rate of the Canadian dollar is $.80. The spot rate forecasted for one year ahead is:

• A) $.860.
• B) $.848.
• C) $.740.
• D) $.752.
• E) none of the above

Learn the definitions and examples of positive and negative correlations.

Differentiate between correlation and causation.

Identify and interpret correlation coefficients in research contexts.

Understand what a representative sample is and its importance in research.

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Definitions:

Discount Factor

A multiplier used in discounting to calculate the present value of future cash flows or earnings.

Working Capital

The difference between a company's current assets and current liabilities, indicating the liquidity and short-term financial health of the business.

Discount Rate

The interest rate used to discount future cash flows to their present value.

Salvage Value

The assessed salvage value of an asset at the close of its lifespan.