What Is the Intrinsic Value of a Foreign Currency Option

question 9

Multiple Choice

What is the intrinsic value of a foreign currency option?

• A) The difference between the spot rate and the strike price
• B) The gain that could be realized if the option was exercised immediately
• C) The chance that a currency will rise over time to make the option in the money
• D) The difference between a call option and a put option

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Definitions:

Accounting Cycle

The process of recording and processing all financial transactions of a company, from when the transaction occurs, to its representation on the financial statements.

Ledger

A comprehensive collection of a company's financial accounts.

Trial Balance

A Trial Balance is a bookkeeping worksheet in which the balances of all ledgers are compiled into debit and credit columns to ensure that total debits equal total credits.

Financial Statements

Reports that show the financial performance and position of a company, including the balance sheet, income statement, and cash flow statement.