Which of the following statements about forward exchange rates is false?
A) They reduce uncertainty about the future value of currencies.
B) They reflect expectations about the future value of currencies.
C) They are usually slightly lower than the spot rate.
D) All of these options are true.

Question

Quizplus · Accepted Answer

Forward exchange rates are usually slightly higher than the spot rate, not lower. This is because they include an adjustment for the interest rate differential between the two currencies. The other statements in the options are true.

Which of the Following Statements About Forward Exchange Rates Is