A ________ is written between a firm and a bank and it fixes the currency exchange rate for a transaction that will occur at a future date.

Question

Quizplus · Accepted Answer

A currency forward contract fixes the exchange rate between two currencies for a future transaction. Currency options contracts allow the holder to either buy or sell a currency at a specified exchange rate. Currency call options give the holder the right to buy a currency, while currency put options give the holder the right to sell a currency. However, none of these options fix the exchange rate for a future transaction like a currency forward contract does.

A ________ Is Written Between a Firm and a Bank