Which of the following is NOT true about a range forward contract?
A) It ensures that the exchange rate for a future transaction will lie between two values
B) It can be structured so that it costs nothing to set up
C) It is constructed from two options and a forward contract
D) It can be used to hedge either a future inflow or a future outflow of a foreign currency

Question

Quizplus · Accepted Answer

A range forward contract is not constructed from two options and a forward contract. It is typically structured as a combination of a long (buy) and a short (sell) forward contract with different strike prices, which create a range of possible exchange rates for the future transaction.

Which of the Following Is NOT True About a Range