Friday, June 24, 2011

Series 7 Exam - Series 7 Exam Question

Here is a great option question for the series 7 exam.

A US importer is buying $10,000,000 worth of goods from a Japanese manufacturer. The payment will be made 6 months from now in Japanese Yen. To hedge themselves the US importer would do which of the following ?

A) Buy puts on the US dollar
B) Buy calls on the US dollar
C) Buy Puts on the Japanese Yen
D) Buy Calls on the Japanese Yen

Take some Free series 7 questions on our site at:

http://www.securitiesce.com/web/pages/series7/index.php


D) US importers will always buy calls on the foreign currency to hedge themselves. The Dollar based answer is always wrong. There are no options trading on the US dollar in the US.

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