As a Foreign Exchange Hedging Tool, Options Have All of the Following

question 24

Multiple Choice

As a foreign exchange hedging tool, options have all of the following characteristics EXCEPT

• A) the right to buy or sell an amount of foreign currency.
• B) the ability to specify time period.
• C) the ability to specify price.
• D) an obligation to buy or sell.

Understand the significance of price to earnings ratio in evaluating company stock.

Understand the concept of credit risk and how it affects bond interest rates.

Explain the role of financial markets in allocating resources and achieving market equilibrium.

Describe the structure, function, and types of financial instruments and intermediaries.

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Definitions:

Objective Introspection

The process of examining and measuring one’s own thoughts and mental activities.

Empiricism

A philosophical stance emphasizing the importance of experience and evidence gathered through the senses in the acquisition of knowledge.

Bias

Bias refers to a disproportionate weight in favor or against an idea or thing, typically in a way that is closed-minded, prejudicial, or unfair.

Explanation

A statement or account that makes something clear by describing the relevant structure or operation, or circumstances, providing insight into cause-and-effect relationships.