Currency Options and Currency Futures Options Have Different Values Because

question 8

Multiple Choice

Currency options and currency futures options have different values because

• A) the payoff on the currency option depends on the exchange rate at maturity,while the currency futures option's payoff depends on the exchange rate futures price at maturity.
• B) the payoff on the currency option depends on the exchange rate futures price at maturity,while the currency futures option's payoff depends on the exchange rate at maturity.
• C) currency options are American while currency futures options are European.
• D) currency futures options are American while currency options are European.
• E) currency options are quoted in U.S.dollars while currency futures options are quoted in the foreign currency.

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Definitions:

Equity Method

The equity method is an accounting technique used by a company to record its investment in another company when it has significant influence but not full control, typically between 20% and 50% ownership.

Significantly Influenced

A condition where an investor has a considerable but not controlling interest in another company, able to affect its policies without direct control.

Non-Strategic Investments

Investments made without a long-term plan or alignment with the core goals of an investor or organization.

Short Or Long-Term

A classification that distinguishes between assets, liabilities, or goals based on the duration, typically under or over one year, respectively.