A contingency graph for the purchaser of a call option compares the price paid for the option to the payoffs received under various exchange rate scenarios.

Question

Quizplus · Accepted Answer

A contingency graph is a visual representation of the potential outcomes of an investment under different possible scenarios. In the case of a purchaser of a call option, the graph would compare the price paid for the option to the potential payoffs under different exchange rate scenarios.

A Contingency Graph for the Purchaser of a Call Option