The Purchase of a Currency Put Option Would Be Appropriate

question 151

Multiple Choice

The purchase of a currency put option would be appropriate for which of the following?​

• A)Investors who expect to buy a foreign bond in one month.
• B)Corporations that expect to buy foreign currency to finance foreign subsidiaries.
• C)Corporations that expect to collect on a foreign account receivable in one month.
• D)all of the above

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Definitions:

Long-term Assets

Assets that are expected to provide economic benefits to a company for a period longer than one year, such as real estate or equipment.

Exchange Rate

The price of one currency expressed in terms of another currency, determining how much of one currency can be exchanged for another.

Canadian Dollars

The official currency of Canada, represented by the symbol CAD.

Trading Securities

Financial instruments like stocks or bonds held by a firm, primarily for the purpose of selling them in the near term to realize a gain.