A contract that provides the right,but not the obligation,to buy or sell a given amount of currency at a fixed exchange rate on or before the maturity date is called an ______.
A) Excise option
B) Foreign currency option
C) Foreign currency swap
D) Hedge contract

Question

Quizplus · Accepted Answer

This type of contract is a foreign currency option, which grants the holder the right to buy or sell currency at a fixed exchange rate on or before the maturity date. It is not a foreign currency swap, which involves the exchange of currencies at both the beginning and end of the contract, nor is it an excise option or hedge contract, which are not specific to currency trading.

A Contract That Provides the Right,but Not the Obligation,to Buy