Which of the Following Statements Is False

Which of the following statements is false?

A) Currency options allow firms to lock in a future exchange rate; currency forward contracts allow firms to insure themselves against the exchange rate moving beyond a certain level.
B) Generally speaking, cash-and-carry strategies are used primarily by large banks, which can borrow easily and face low transaction costs.
C) Currency options, like stock options, give the holder the right-but not the obligation-to exchange currency at a given exchange rate.
D) Many managers want the firm to benefit if the exchange rate moves in their favour, rather than being stuck paying an above-market rate.

Correct Answer:

Verified

Show Answer