When it comes to foreign exchange derivativesa forward, Ask an Expert

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When it comes to foreign exchange derivatives,

A forward contract is not considered to be a foreign exchange derivative instrument.

If a currency appreciates above its strike price and a speculator has an American call option for that currency, the speculator can exercise the option and make a profit.

Currency futures contracts are mainly used by large banks while currency swaps are mainly used by individuals through their home computers.

American options is less flexible than a European option when it comes to the right to exercise the option at the strike price.

There is little opportunity for speculators to make money by using currency futures contracts.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92304677

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