Which of the Following Statements Is Correct

question 18

Multiple Choice

Which of the following statements is correct?

• A) In Canada, the cost of a unit of foreign currency in Canadian dollars is a direct quotation, while the cost in that foreign currency of purchasing one Canadian dollar is referred to as an indirect quotation.
• B) In Canada, the cost of a unit of foreign currency in Canadian dollars is an indirect quotation, while the cost in that foreign currency of purchasing one Canadian dollar is referred to as a direct quotation.
• C) In Canada, the cost of a unit of foreign currency in Canadian dollars is a direct quotation, and the cost in that foreign currency of purchasing one Canadian dollar is also referred to as a direct quotation.
• D) In Canada, the cost of a unit of foreign currency in Canadian dollars is an indirect quotation, while the cost in that foreign currency of purchasing one Canadian dollar is also referred to as an indirect quotation.

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Definitions:

American Call Option

An option contract that gives the holder the right, but not the obligation, to buy an underlying asset at a specified price within a set period, anytime until the contract's expiration.

Agreed Upon Quantity

This is the quantity of goods that the buyer and seller have mutually agreed upon for a transaction.

Expiration Date

The specific day on which an option contract or other derivative expires and can no longer be exercised.

Payoff Profile

A graphical representation that shows the potential profit or loss of an option at various prices of the underlying asset.