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- Subject
- Foreign Exchangeeconomics-mcqs › foreign-exchange
- Published
- 1 Jun 2019
- Last updated
- 28 May 2026
Which financial instrument grants the owner the right, without the obligation, to purchase or sell currency?
Multiple choice question for Foreign Exchange. Select an option, then review the explanation below.
Explanation
A foreign exchange option provides the holder with the right, but not the obligation, to buy or sell a currency at a predetermined price before or at the contract's expiration. In contrast, swaps, arbitrage, and futures involve obligations or different mechanisms.
More Foreign Exchange MCQs
Practice related questions from the same subject.
- 1.In a floating exchange rate system, what is the typical trend observed regarding currency values?
- 2.What term describes the increase in the value of one currency compared to another?
- 3.What is the typical impact of a fiscal expansion in the UK on the value of the pound sterling?
- 4.What do we call exchange rates that fluctuate based solely on market supply and demand without government intervention?
- 5.What type of exchange rate system was established by the agreements made at the 1944 Bretton Woods conference?