Asked by
Destini Lewis
on Dec 02, 2024Verified
If the forward rate for the British pound indicates that it is selling at a discount relative to the spot rate, foreign exchange brokers expect:
A) a decrease in the demand for British pounds.
B) no change in the demand for British pounds.
C) the British pound to weaken against the U.S. dollar.
D) the British pound to strengthen against the U.S. dollar.
E) None of the above is correct.
Forward Rate
is a financial term referring to a predetermined interest rate or currency exchange rate agreed upon for a transaction that will occur at a future date.
Discount
A reduction from the usual cost of something or the process of determining the present value of future cash flows.
- Understand the concepts of spot and forward exchange rates and their implications on international trade and investment.
Verified Answer
JP
Learning Objectives
- Understand the concepts of spot and forward exchange rates and their implications on international trade and investment.