A foreign currency ________ gives the purchaser the right, not the obligation, to buy a given amount of foreign exchange at a fixed price per unit for a specified period.
A) future
B) forward
C) option
D) swap

Question

Quizplus · Accepted Answer

A foreign currency option gives the purchaser the right, but not the obligation, to buy or sell a specified amount of foreign exchange at a fixed price per unit for a specified period. Futures, forwards and swaps are financial instruments that involve an obligation to buy or sell a specified amount of foreign exchange at a future date and at a specified price. Therefore, the best choice is C, option.

A Foreign Currency ________ Gives the Purchaser the Right, Not