An Importer Who Is Expecting to Pay for a Purchase

question 43

Multiple Choice

An importer who is expecting to pay for a purchase in three months' time buys a foreign- currency call option today.Which of the following is correct?

• A)Benefit from exercising the option if the foreign currency falls below the option exchange rate.
• B)Benefit from exercising the option if the foreign currency rises above the option exchange rate.
• C)Be protected from adverse exchange rate risk but be able to benefit financially from favourable exchange rate movements.
• D)Both A and C
• E)Both B and C

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Definitions:

Negative Effects

Detrimental outcomes or impacts resulting from a particular action, event, or condition.

Psychiatric Drugs

Medications used to treat and manage mental health conditions, affecting mood, thought processes, or behavior.

Pharmaceutical Industry

The sector of healthcare that deals with the development, production, and marketing of medications.

Suicide Risk

The possibility that an individual will attempt to take their own life, often associated with mental health conditions such as depression or anxiety.