Briefly Answer the Following Questions

question 11

Essay

Briefly answer the following questions.
(a) What is a foreign currency option? Is there any difference between a European and American option?
(b) Why might you prefer an option over a futures or forward contract?
(c) When can a gain be made by the holder of a call option? A put option?

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Definitions:

Drainage Pattern

The arrangement of channels formed by the flow of water across the landscape, influenced by factors such as underlying rock types, topography, and climate.

Erosion Resistance

The ability of material or landform to withstand wear and transport by natural forces such as wind or water.

Fractures

Breaks in rocks along which there has been no significant movement parallel to the surfaces of the fracture.

Drainage Pattern

The arrangement of channels in an area, shaped by the landscape's topography and underlying geology.