If the Canadian dollar became stronger relative to the Australian dollar, the price of
A) both the call and the put options on the Canadian dollar will decrease.
B) a call option on the Canadian dollar will decrease.
C) a call option on the Canadian dollar will increase.
D) a put option on the Canadian dollar will increase.

Question

Quizplus · Accepted Answer

A stronger Canadian dollar means it is more valuable, making a call option (the right to buy) on the Canadian dollar more valuable, as it allows the holder to purchase the currency at a potentially lower price than the market rate.

If the Canadian Dollar Became Stronger Relative to the Australian