Which of the Following Correctly Describes a Foreign Exchange Market

question 48

Multiple Choice

Which of the following correctly describes a foreign exchange market?

• A)A place where foreign goods are bought and sold in any country.
• B)A market where foreign tourists can buy domestic goods.
• C)A global market where people exchange one currency for another.
• D)A bank in New York city that trades in gold certificates.
• E)The central banks of different countries that control the supply of currencies.

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Definitions:

Market Price

The going rate for which a commodity or service can be traded or acquired in the market.

Put Option

A financial contract giving the owner the right, but not the obligation, to sell a specified amount of an underlying asset at a predetermined price within a specified time frame.

Exercise Price

The sum for which the bearer of an option has the privilege to acquire (with a call option) or dispose of (with a put option) the foundational asset.

Stock Price

The cost of purchasing a share of a company's stock, reflecting the market's valuation of the company at any given time.