Asked by
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on Dec 02, 2024
Verified
If the direct quote, forward exchange rate is lower than the spot rate, the forward currency is trading at a:
A) spot rate.
B) discount.
C) premium.
D) forward spot rate.
Forward Exchange Rate
The agreed upon exchange rate for a currency pair to be exchanged on a future date, used in hedging and trading strategies.
Spot Rate
The current market price at which a particular asset can be bought or sold for immediate delivery.
Discount
The reduction in the nominal value of something or the process of determining the present value of future cash flows.
- Acquire knowledge about the concepts of spot and forward exchange rates and their effects on international trade and investment activities.
Verified Answer
BG
Learning Objectives
- Acquire knowledge about the concepts of spot and forward exchange rates and their effects on international trade and investment activities.