If the Canadian Dollar Became Stronger Relative to the U

question 84

Multiple Choice

If the Canadian dollar became stronger relative to the U.S. dollar, the price of

• A) a call option on the Canadian dollar will increase.
• B) a put option on the Canadian dollar will increase.
• C) a call option on the Canadian dollar will decrease.
• D) both the call and the put options on the Canadian dollar will decrease.

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Definitions:

Domestic Bonds

Bonds issued by a government or corporation within its own country and usually denominated in the country's own currency.

Trading Floor

The physical or electronic space where traders buy and sell securities, such as stocks or futures, in financial markets.

Foreign Exchange Market

A global decentralized or over-the-counter market for trading currencies, determining the foreign exchange rates for every currency.

Triangle Arbitrage

A riskless profit strategy that takes advantage of discrepancies between three foreign currencies in the forex market.