Determines the future spot exchange rate

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Reference no: EM132036624

1. Which of the following factors does affect the valuation of a fixed notional equity swap that pays the equity return in exchange for a fixed interest rate payment?

A. Expected equity price growth.

B. Interest rate volatility structure.

C. Interest-rate term structure.

D. All of the above.

2. The forward foreign exchange rate

A. Determines the future spot exchange rate.

B. Is unaffected by changes in interest rates.

C. Is the ratio of equivalent spot amounts in each currency compounded to the forward maturity at the respective currencies' spot rates.

D. Is the rate that ensures that future expected purchasing power will be in parity.

Reference no: EM132036624

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