If the MPS Is 0

question 194

Multiple Choice

If the MPS is 0.25 and the MPC is 0.6, then the MPM

• A) is 0.85.
• B) is 0.35.
• C) is 0.15.
• D) cannot be determined from the given information.

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Definitions:

Forward Contract

A financial derivative that represents an agreement to buy or sell an asset at a pre-agreed future point in time at a specified price.

Spot Rate

The current exchange rate at which a currency can be bought or sold for immediate delivery.

Settlement Date

The date on which a trade is finalized, and the buyer must make payment and the seller deliver the asset.

Fair Value Hedge

A type of hedge that aims to offset changes in the fair value of an asset or liability or an unrecognized firm commitment.