Question

T or F: The market forward rate ALWAYS turns out to be the future spot rate....

T or F: The market forward rate ALWAYS turns out to be the future spot rate.

T or F: It is much more important to convert costs of equity to global costs of equity than it is to convert costs of debt to global costs of debt.

T or F: In international finance, marginal tax rates are preferred over effective tax rates.

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Answer #1

1. Given statement is FALSE as market forward rate does not always turn out to be the future spot rate because future spot rate are also changing continuously according to the demand and supply and it is just an expectation of the future spot rate but when it will be revisited in the future, it will mean that these rates are changing.

The given statement is FALSE

2. The given statement is TRUE as there are various types of different risk free rate and risk premium associated all across the globe so cost of calculation is more tricky for cost of equity then cost of debt

3. The given statement is TRUE as marginal tax rate will be having more importance than the effective tax rate because effective tax rate will be providing with the lower tax rate.

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