Which of the following statements holds true for forward exchange rates?
A)It refers to the weighted average of a basket of foreign currencies.
B)It refers to the rate at which two parties agree to exchange currency and execute a deal that takes place immediately.
C)It refers to the rate that determines pay-offs in a financial contract and that is outside the control of the parties to the contract.
D)It refers to the rate at which two parties agree to exchange currency and execute a deal at some specific point in the future, usually 30 days, 60 days, 90 days, or 180 days in the future.
E)It refers to a form of exchange traded derivative whose underlying value is the rate on various financial interest rates, including treasury bills and bonds.

Question

Quizplus · Accepted Answer

Forward exchange rates are agreements between two parties to exchange currencies at a specified rate on a specified future date, which can be 30, 60, 90, or 180 days in the future, or even longer.

Which of the Following Statements Holds True for Forward Exchange