Question

Which statement is true regarding a foreign currency option? Multiple Choice A foreign currency option gives the holder the obligation to buy or sell foreign currency in the future. A foreign currency option gives the holder the obligation to only sell foreign currency in the future. A foreign currency option gives the holder the obligation to only buy foreign currency in the future. A foreign currency option gives the holder the right but not the obligation to buy or sell foreign currency in the future. A foreign currency option gives the holder the obligation to buy or sell foreign currency in the future at the spot rate on the future date.

Answer 1

Answer: A foreign currency option gives the holder the right but not the obligation to buy or sell foreign currency in the future

Step-by-step explanation:

A currency option which is also referred to as the forex option is a contract which gives the buyer the right, but not obligated to purchase or sell a particular currency at an exchange rate on or before a particular date.

Currency options is a common way for individuals, corporations, or financial institutions to curtail adverse movements in the exchange rates.