A currency \'forward\' transaction Select one: a. means that the payment must be

Question

A currency 'forward' transaction Select one: a. means that the payment must be made now with delivery at a future date 0 b. calls for purchase delivery of a currency at a fixed exchange rate O c. Is a popular hedging instrument among multinational firms d. all of the above e. a and b only f. a and c only g.b and c only O O If the Central Bank's goal was to decrease the value of its currency, or to fight an appreciation of its currency's value on the foreign exchange market, the bank could Select one: a. do all of the suggested choices b. buy its own currency with foreign currency G.buy its own currency d. sell foreign currency e.sell its own currency in exchange for foreign currency

Explanation / Answer

1. g. b and c only

2. e. option is correct

If the goal were to decrease the value of a? country's currency ? to fight an appreciation of the domestic currency in exchange for foreign currency ? the central bank? would sell its own currency in exchange for foreign currency.

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