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The major advantage of the forward market is risk reduction.

A) True
B) False

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Assume that a firm purchases foreign currency in order to complete the purchase of raw material from an overseas supplier.The currency is purchased today at an exchange rate that is good only for today.This transaction is referred to as a(n) ________ transaction.


A) forward
B) arbitrage
C) spot
D) hedge

E) A) and B)
F) B) and D)

Correct Answer

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