If the forward rate is greater than the spot rate, what are markets signaling about their expectations for the future spot rates for the home currency?
What will be an ideal response?
The home currency is expected to depreciate over the maturity period of the forward contact.
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An increase in the interest rate will ________.
A. cause a move down along the money supply curve B. cause a move up along the money supply curve C. shift the money supply curve to the left D. shift the money supply curve to the right
Purchasing power parity suggests that
a. Given fixed prices, interest rates adjust so that a good costs the same across two countries b. Given fixed exchange rates, prices adjust such that a good costs the same across two countries c. All of the above d. None of the above
Bart operates a lemonade stand in front of his house. His father works at the Springfield Nuclear Power Plant. Which of the following is most likely to be true?
a. The long run is the same for the power plant as it is for the lemonade stand. b. The long run is longer for the power plant than it is for the lemonade stand. c. The long run is shorter for the power plant than it is for the lemonade stand. d. We cannot compare the long runs because these are different businesses. e. It's impossible for the power plant short run to be shorter than the lemonade stand's long run.
Price discrimination means charging:
A. the same price to all buyers even if production costs are different. B. different prices for different products because production costs are different. C. different prices to different buyers for essentially the same good or service. D. higher prices to women and minorities.