The Writer of an Currency Call Option Is Obligated to Buy

question 9

True/False

The writer of an currency call option is obligated to buy the currency if the option is exercised.

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Definitions:

Mutually Beneficial Transactions

Exchanges or deals that provide a gain to all parties involved, often used in the context of trade or economic transactions.

Insurance

A financial product that provides protection against losses or damages, typically in exchange for premium payments.

Exposure To Risk

The state of being open to damage or loss from factors outside of one’s control, often used in the context of investments and financial markets.

Risk-Averse

The characteristic of preferring to avoid risk, typically by choosing more certain outcomes over those with potentially higher but risky returns.