Which one of the following statements concerning forward trades is correct?
A) A forward trade is an agreement between parties to exchange a predetermined amount of currency at a rate to be determined in the future.
B) The forward market provides a mechanism whereby firms can eliminate the collection float associated with foreign trade.
C) The spot rate is always more favourable that the forward rate.
D) Forward trades normally settle in two years or less.
E) The exchange rate on a 90-day forward trade is established at the time of the trade but the currencies do not exchange hands until the end of the 90 days.
Correct Answer:
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