Foreign Currency Options Reflect ____ Forward and Future Contracts

question 29

Multiple Choice

Foreign currency options reflect ____ forward and future contracts.

• A) an obligation for
• B) an alternative to
• C) a delivery of
• D) a specific requirement of

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Definitions:

Income Effect

The impact of income changes on an individual or economic level on the demand for various products or services.

Substitution Effect

The adjustment in how consumers spend due to differences in the prices between goods, leading to the substitution of one product for another.

Inferior Good

A type of good whose demand decreases when consumer income rises, unlike normal goods, which have a positive correlation with income.

Normal Good

A type of good for which demand increases as the income of the consumer increases, showing a positive relationship between income and demand.