When Currency Options Are Not Standardized and Traded Over-The-Counter, There

question 59

Multiple Choice

When currency options are not standardized and traded over-the-counter, there is ____ liquidity and a ____ bid/ask spread.

• A) less; narrower
• B) more; narrower
• C) more; wider
• D) less; wider

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Definitions:

Home Bias

The tendency of investors to allocate a greater share of their portfolios to domestic securities than would be the case under neutral diversification.

Overweight Investments

An investment strategy where a portfolio holds a higher percentage of a particular security or sector than the benchmark against which it is compared.

American Depository Receipts

Securities that represent shares in foreign public companies and are traded on U.S. stock exchanges, allowing investors to invest in overseas stocks more easily.