Which of the Following Is Correct

question 13

Multiple Choice

Which of the following is correct?

• A) The longer the time to maturity, the less the value of a currency call option, other things equal.
• B) The longer the time to maturity, the less the value of a currency put option, other things equal.
• C) The higher the spot rate relative to the exercise price, the greater the value of a currency put option, other things equal.
• D) The lower the exercise price relative to the spot rate, the greater the value of a currency call option, other things equal.

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Definitions:

Currency Speculation

The act of buying, selling, or holding currencies with the expectation that their value will change to make a profit.

Merger Arbitrage

An investment strategy that aims to profit from the successful completion of mergers and acquisitions by trading the stocks of the companies involved.

Risk Profile

An evaluation of an individual's willingness and ability to take risks, as well as the risks associated with their investment assets.

Performance Evaluation

The assessment of how investments or portfolios have performed over time, considering factors like return, risk, and comparison to benchmarks.