A ________ exchange rate is the rate that a firm can tie in for a future transaction date.

Question

Quizplus · Accepted Answer

The term "forward" in the option B refers specifically to a rate that is agreed upon now, but for delivery at a future date. Therefore, a forward exchange rate would be a rate that a firm can tie for a future transaction date, making option B the correct answer. A fixed exchange rate (option A) is a rate that is determined and maintained by a government's central bank, while a floating exchange rate (option C) is determined by supply and demand in the market. Option D "none of the above" is not the best choice, as option B does indeed fit the description given in the question.

A ________ Exchange Rate Is the Rate That a Firm