Suppose the Spot Rate and Forward Rate for the British

question 11

Multiple Choice

Suppose the spot rate and forward rate for the British pound are $and $respectively. Assume the forward pound is selling at a annualized discount, what is the number of days of the forward contract?

• A) 180 days
• B) 120 days
• C) 90 days
• D) 60 days

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Definitions:

Efficiency

The optimal use of resources to achieve the desired outcome with minimal waste or effort.

Equity

Refers to fairness or justice in the distribution of wealth, resources, and opportunities.

Total Surplus

The sum of consumer surplus and producer surplus in a market, representing the total net benefit to society.

Equilibrium Price

The price at which the quantity of a good demanded by consumers equals the quantity supplied by producers, leading to market stability.