Which of the Following Statements Regarding Currency Options Is False

question 37

Multiple Choice

Which of the following statements regarding currency options is false?

• A) Firms often prefer forward contracts to currency options if the transaction they are hedging might not take place.
• B) Currency options are another method that firms commonly use to manage exchange rate risk. Currency options, like the stock options, give the holder the right-but not the obligation-to exchange currency at a given exchange rate.
• C) Currency forward contracts allow firms to lock in a future exchange rate; currency options allow firms to insure themselves against the exchange rate moving beyond a certain level.
• 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.

---

Definitions:

Neuron Plasma Membrane

The lipid bilayer that encloses the cytoplasm of a neuron, controlling the passage of ions and molecules in and out of the neuron.

Synapse

Region where a neuron’s axon terminals transmit signaling molecules (neurotransmitter) to another cell.

Neurons

Specialized cells within the nervous system that transmit information to other nerve cells, muscle, or gland cells.

Myelin Sheath

A fatty layer that encases the axons of some neurons, which increases the speed at which electrical impulses are conducted.