[Solved] Using options to place a bet on the direction in which you believe the market is likely to move is called: A)speculation. B)hedging. C)a covered position. D)a naked position. Currency Risk: The potential for financial loss resulting from fluctuations in exchange rates affecting investments or transactions in foreign currencies. Foreign Bonds: Bonds sold by a foreign borrower but denominated in the currency of the country in which the issue is sold. Thus, a Canadian firm selling bonds denominated in Swiss francs in Switzerland is selling foreign bonds. Domestic Bonds: Bonds issued within a country's borders and typically denominated in that country's currency. Market Rate of Interest: The prevailing rate of interest determined by supply and demand in the credit market that borrowers must pay to lenders.