GK
ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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would prevail at a future date
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prevailing today for future delivery
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prevailing today for immediate delivery
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none of the above
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Detailed explanation-1: -The forward exchange rate is the rate at which a commercial bank is willing to commit to exchange one currency for another at some specified future date. The forward exchange rate is a type of forward price.
Detailed explanation-2: -It is a sort of ‘contracted’ exchange rate to be applicable for the transactions which are signed today but are to be honoured sometime in the future. Q. Very Short Answer Type Questions: Give the meaning of forward exchange rate.
Detailed explanation-3: -The spot rate is an exchange rate that requires immediate settlement with delivery of the traded currency. The forward exchange rate is the exchange rate at which a buyer and seller agree to transact a currency at some date in the future.
Detailed explanation-4: -The forward exchange rate, , observed at time for an exchange rate at is the market determined certainty equivalent of the future spot exchange rate . The forward premium is generally quoted by dealers in percentage terms (annualized) can be used to calculate the forward rate using the simple equation below. t t-1 t, .