A Foreign Currency Option Contract Traded on U

question 39

Multiple Choice

A foreign currency option contract traded on U.S. exchanges allows for the sale or purchase of a set amount of

• A) U.S. currency at a floating exchange rate.
• B) U.S. currency at a fixed exchange rate.
• C) foreign currency at a floating exchange rate.
• D) foreign currency at a fixed exchange rate.
• E) None of these are correct.

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Definitions:

Average Fixed Cost

The fixed costs of production divided by the quantity of output produced. It decreases as production increases.

Range of Output

The spectrum of quantity of goods or services produced, from minimum to maximum, that a company or an economy can achieve.

Mixers

Devices or substances used in the preparation of alcoholic beverages to add flavor or dilute strength, such as soda, juice, or tonic.

Average Total Cost

A financial metric that represents the total cost of production (fixed and variable costs) divided by the total quantity of output produced, indicating the cost per unit of output.