An important feature of a _______ is that the holder has the right but not the obligation to buy or sell currency ?
Correct answer: C. foreign exchange option
- A. Swap
- B. foreign exchange arbitrage
- C. foreign exchange option
- D. futures market contract
Explanation
A foreign exchange option gives its holder the right, but not the obligation, to buy or sell currency at a specified rate. A futures contract normally creates an obligation for both parties.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? [email protected]
About Macroeconomics
The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
Practise Macroeconomics
1,499 free Macroeconomics MCQs from Economics, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Discussion
Stuck on an option, or know a faster way to get there? Ask or explain it here.
No comments yet. Be the first to explain this one.
Exams that ask Economics questions like this
Economics is on 3 papers prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for every one of them.
More Macroeconomics questions
If the bank is selling francs for $0.45, then what is the implied franc price of the dollar ?
Riskless transactions to take advantage of profit opportunities due to a price differential or a yield differential in excess of transaction costs are called ?
The franc is said to be selling at a _______ if the spot dollar price is $0.48 and the nine-month forward rate is $0.42 ?
The exchange rate is kept the same across geographically separate markets by ?
In a supply and demand diagram for Japanese yen, with the exchange rate in dollars per yen on the vertical axis, the demand schedule for yen is drawn sloping ?
The largest volume of foreign exchange trading takes place in ?