A ________ allows, but does not require, a firm to buy or sell a specified amount of foreign currency at a specified price at any time up to a specified date.

Question

Quizplus · Accepted Answer

The description matches that of a currency option, which gives the holder the right, but not the obligation, to buy or sell a specified amount of foreign currency at a specified price (strike price) at any time up to a specified date (expiration date). A forward swap is an agreement to exchange currencies on a future date at a predetermined rate, while a call option is a type of currency option that gives the holder the right to buy foreign currency at a specified price. A discount put is not a commonly used financial term.

A ________ Allows, but Does Not Require, a Firm to Buy