What has occurred when one company purchases the right to buy a foreign currency sometime in the future at an exchange rate quoted today?
A) The company has acquired a call option.
B) The company has entered a forward contract.
C) The currency has appreciated relative to the dollar.
D) The company has acquired a put option.

Question

Quizplus · Accepted Answer

A call option gives the holder the right, but not the obligation, to purchase a currency at a specified exchange rate on or before a specified date.

What Has Occurred When One Company Purchases the Right to Buy