Currency Call Options Allow the Purchaser to Lock in the Price

question 79

True/False

Currency call options allow the purchaser to lock in the price paid for a currency. Therefore, they are often used by MNCs to hedge foreign currency payables.

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Definitions:

Ability to Generate Cash

The capacity of a business to convert activities or assets into liquid funds to meet short-term obligations and support operations.

Financial Strength

A term that refers to the financial stability and health of an organization, often assessed through metrics such as liquidity, solvency, and profitability.

Balance Sheet

A financial statement that summarizes a company's assets, liabilities, and shareholders' equity at a specific point in time, providing a snapshot of its financial condition.

Assets and Liabilities

Components of a company's financial statement, where assets represent resources owned and liabilities represent obligations owed.