Which financial instrument provides a buyer the right to purchase or sell a fixed amount of currency at a prearranged price, within a few days to a couple of years ?
Correct answer: B. foreign currency option
- A. letter a credit
- B. foreign currency option
- C. cable transfer
- D. bill of exchange
Explanation
A foreign-currency option gives its buyer the right, but not the obligation, to buy or sell a specified currency at a predetermined price during a stated period. The other instruments listed do not provide this combination of currency choice and limited obligation.
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