Conditional currency options are:
A)options that do not require premiums.
B)options where the premiums are canceled if a trigger level is reached.
C)options that allow the buyer to decide what currency the option will be settled in.
D)none of the above

Question

Quizplus · Accepted Answer

Conditional currency options are options where the premiums are canceled if a trigger level is reached. The trigger level could be based on factors such as exchange rate movements or economic indicators. This makes them a popular tool for hedging currency risk as the buyer is protected from downside risk but does not have to pay the premium if the trigger level is not reached. Therefore, option B is the correct answer. Options A and C are not correct because they do not accurately describe the features of a conditional currency option. Option D is incorrect because there is a correct answer among the options.

Conditional Currency Options Are