If the One-Year Forward Rate for the Euro Is $1

question 17

Multiple Choice

If the one-year forward rate for the euro is $1.07, while the current spot rate is $1.05, the expected percentage change in the euro is ____%.

• A) 1.90
• B) 2.00
• C) -1.87
• D) none of the above

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Definitions:

Surplus

The condition that occurs when the quantity of a good or service supplied exceeds the quantity demanded, often leading to a decrease in prices.

Shortage

An instance in the marketplace where the need for a product or service outstrips its provision.

Equilibrium Price

The cost at which the supply and demand for goods are equal.

Quantity Demanded

The total amount of a good or service that consumers are willing and able to purchase at a given price in a specified period.