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Currency Forwards Are Good Indicators of the Future Spot Rate

Question 39

Multiple Choice

Currency forwards are good indicators of the future spot rate of a currency because they:


A) require that all parties trading in that currency at a specific future date value the currency at the same amount.
B) contractually bind entities to transaction business in the currency in the future at the current spot rate.
C) control what the future spot rate of the currency will be.
D) represent the estimation of future currency values by entities that have contracted for those rates in future transactions.

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