Which of the following is NOT true regarding nondeliverable forward (NDF) contracts?
A) NDFs are used primarily for emerging market currencies.
B) Pricing of NDFs reflects basic interest rate differentials plus an additional premium charged for dollar settlement.
C) NDFs can only be traded by central banks.
D) All of the above are true.

Question

Quizplus · Accepted Answer

NDFs can be traded by various market participants, including banks, corporations, and hedge funds. They are not limited to central banks. Therefore, option C is not true. Options A and B are true, and D is an incorrect statement as it lists all options as true.

Which of the Following Is NOT True Regarding Nondeliverable Forward