​If You Have Bought a Right to Buy Foreign Currency

question 39

Multiple Choice

​If you have bought a right to buy foreign currency, you are:

• A) ​a call writer.
• B) ​a call buyer.
• C) ​a put writer.
• D) ​a put buyer.

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Definitions:

Compounded

The method of calculating interest where the accumulated interest is added back to the principal sum, so that interest in the next period is then earned on the principal plus previously accumulated interest.

Principal

The original amount of money invested or loaned, before interest.

Compounded

The process of calculating interest on both the initial principal and the accumulated interest from previous periods.

Semi-annually

Occurring twice a year or every six months.