A Trader Who Is Purchasing a Call Option on Foreign

question 36

True/False

A trader who is purchasing a call option on foreign currency should do so before the domestic interest rate rises.

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Definitions:

Cumulative Dividend

A type of dividend that accumulates if not paid in one period and must be satisfied before dividends can be distributed to common shareholders.

Preferred Stock

A class of ownership in a corporation with a fixed dividend payout, which takes precedence over common stock dividends.

Consolidated Net Income

The total net income of a parent company and its subsidiaries, after intercompany transactions have been eliminated.

Dividends

When a corporation distributes its profits to the shareholders, often as profit payments.