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Archie

2/14/2013 4:18:39 AM

Definition of ''Currency Option''

A contract which grants the holder the right. however it is not the obligation, to buy or sell currency at a particular exchange rate during a specified period of time. For this right, to the broker, a premium is paid, which will vary depending upon the number of contracts purchased. Currency options are one of the best methods for corporations or individuals to hedge against adverse movements in exchange rates.

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