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:

Employed

Refers to individuals who are currently working for pay or profit, including full-time and part-time positions, as well as temporary and seasonal work.

Cyclical Unemployment

Unemployment that results from economic recessions or downturns, reflecting the cyclical nature of an economy, where demand for labor decreases during slow economic periods.

Labor Force

The total number of people, including both employed and unemployed individuals, who are actively seeking work.

Unemployment Rate

The ratio of the workforce that is in a state of joblessness while searching for work opportunities.