The Purchase of a Currency Put Option Would Be Appropriate

question 115

Multiple Choice

The purchase of a currency put option would be appropriate for which of the following?

• A) Investors who expect to buy a foreign bond in one month.
• B) Corporations who expect to buy foreign currency to finance foreign subsidiaries.
• C) Corporations who expect to collect on a foreign account receivable in one month.
• D) all of the above

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Definitions:

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.

Coupon

The interest rate paid by fixed-income securities, typically expressed as an annual percentage of the face value.

Selling For

The process or act of offering goods or services in exchange for money.