A foreign currency option contract traded on U.S. exchanges allows for the sale or purchase of a set amount of
A) U.S. currency at a floating exchange rate.
B) U.S. currency at a fixed exchange rate.
C) foreign currency at a floating exchange rate.
D) foreign currency at a fixed exchange rate.
E) None of these are correct.

Question

Quizplus · Accepted Answer

A foreign currency option contract traded on U.S. exchanges allows for the sale or purchase of a set amount of foreign currency at a fixed exchange rate, providing the buyer the right, but not the obligation, to exchange currencies at a specified rate on or before the expiration of the contract.

A Foreign Currency Option Contract Traded on U