Which Statement Is True Regarding a Foreign Currency Option

question 6

Multiple Choice

Which statement is true regarding a foreign currency option?

• A) A foreign currency option gives the holder the obligation to buy or sell foreign currency in the future.
• B) A foreign currency option gives the holder the obligation only sell foreign currency in the future.
• C) A foreign currency option gives the holder the obligation to only buy foreign currency in the future.
• D) A foreign currency option gives the holder the right but not the obligation to buy or sell foreign currency in the future.
• E) A foreign currency option gives the holder the obligation to buy or sell foreign currency in the future at the spot rate on the future date.

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Definitions:

Preventive Measures

Actions or strategies taken in advance to reduce the risk of harm or to prevent undesirable outcomes.

Demography

The scientific study of populations, including their sizes, compositions, distributions, and how these change over time.

Sociology

The study of social behavior, society, patterns of social relationships, social interaction, and culture that surrounds everyday life.

Negative Checks

Mechanisms that decrease a population's size, such as disease, famine, or war, as described in Malthusian theory.