What Has Occurred When One Company Purchases the Right to Buy

question 45

Multiple Choice

What has occurred when one company purchases the right to buy a foreign currency sometime in the future at an exchange rate quoted today?

• A) The company has acquired a call option.
• B) The company has entered a forward contract.
• C) The currency has appreciated relative to the dollar.
• D) The company has acquired a put option.

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Definitions:

Stagnation

A period of little or no growth, development, or progress.

Object Permanence

The understanding, which develops throughout the first year, that an object continues to exist even when you cannot see it or touch it.

Sensorimotor Stage

The first stage in Piaget's theory of cognitive development, where infants learn through interacting with their environment using their senses and motor actions.

Jean Piaget

A Swiss psychologist known for his pioneering work in child development and his theory of cognitive development.