A(n)________ is the right but not the obligation to buy or sell a foreign currency within a certain time period or on a specific date at a specific exchange rate.
A)forward rate
B)bid
C)offer
D)option

Question

Quizplus · Accepted Answer

A forward rate is the obligation to buy or sell a foreign currency at a specific exchange rate on a specific date. A bid and offer refer to the prices at which a trader is willing to buy or sell a currency pair at any given time. An option gives the holder the right but not the obligation to buy or sell a currency at a specific exchange rate on or before a certain date. Therefore, option is the best choice for this question.

A(n)________ Is the Right but Not the Obligation to Buy