Which of the Following Statements Is FALSE

question 53

Multiple Choice

Which of the following statements is FALSE?

• A)Currency options allow firms to lock in a future exchange rate;currency forward contracts allow firms to insure themselves against the exchange rate moving beyond a certain level.
• B)Generally speaking,cash-and-carry strategies are used primarily by large banks,which can borrow easily and face low transaction costs.
• C)Currency options,like stock options,give the holder the right-but not the obligation-to exchange currency at a given exchange rate.
• D)Many managers want the firm to benefit if the exchange rate moves in their favor,rather than being stuck paying an above-market rate.

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