ACCA Financial Management (F9) Certification Practice Exam

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Prepare for the ACCA Financial Management (F9) Certification Exam with engaging quizzes and interactive content. Dive deep into financial management concepts and boost your exam confidence with questions that come with detailed explanations.

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What defines a currency future?

A contract to buy or sell a specified quantity of foreign currency
An agreement to borrow without a fixed rate
A standardized, market traded contract
Both A and C

The correct answer is: Both A and C

A currency future is defined as a standardized agreement that allows parties to agree on the future purchase or sale of a specified quantity of foreign currency at a predetermined price on a specific date. This type of contract is traded on regulated exchanges, which enhances liquidity and transparency. Having an agreement to buy or sell a specific quantity of foreign currency highlights the essence of currency futures, making it an essential component of risk management for businesses and investors. Additionally, the standardization aspect means that the contracts are not tailored for individual parties but are instead uniform across the market; this facilitates trading and is a key characteristic of futures contracts. Thus, both the notion of specifying a quantity of foreign currency and the fact that these contracts are standardized and traded on the market are foundational to what constitutes a currency future. Therefore, the correct answer encompasses both elements.