Select all that are true regard currency options: (1) A call options gives the holder the right, but not the obligation, to buy the currency at the strike price (exchange rate) stipulated in the contract A put option gives the right to sell the contract currency at the agreed exchange rate to the writer of the option in exchange for the cross currency The writer of an unexercised currency option collects the option fee without the need to do anything else The fee associated with an option is always a cost to the writer regardless of exercise The writer of a currency option is assuming some of the exchange rate risk
Select all that are true regard currency options: (1) A call options gives the holder the right, but not the obligation, to buy the currency at the strike price (exchange rate) stipulated in the contract A put option gives the right to sell the contract currency at the agreed exchange rate to the writer of the option in exchange for the cross currency The writer of an unexercised currency option collects the option fee without the need to do anything else The fee associated with an option is always a cost to the writer regardless of exercise The writer of a currency option is assuming some of the exchange rate risk
Chapter11: Managing Transaction Exposure
Section: Chapter Questions
Problem 1CT
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Please oll option information and correct answer
Transcribed Image Text:Select all that are true regard currency options: (1)
A call options gives the holder the right, but not the obligation, to buy the currency at the strike price (exchange rate) stipulated in the contract
A put option gives the right to sell the contract currency at the agreed exchange rate to the writer of the option in exchange for the cross currency
The writer of an unexercised currency option collects the option fee without the need to do anything else
The fee associated with an option is always a cost to the writer regardless of exercise
The writer of a currency option is assuming some of the exchange rate risk
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