Question

A currency futures contract is a financial derivative that derives its value from an underlying asset. The underlying asset in a currency futures contract is:

Multiple Choice

• None of the options.

• domestic currency.

• a call or put option written on foreign currency.

• a futures contract on the foreign currency.

• foreign currency.

Answer 1

The correct answer is mentioned below :

The correct answer is option "C" and "D"

C - A futures contract on the foreign currency.

D - Foreign currency.

Because, currency futures are a futures contract where the underlying asset is a currency exchange rate and they are the Euro(EUR) to US Dollar exchange rate(U.S) or the British Pound(B.P) to US Dollar exchange rate (U.S) and they are both the foreign currencies and hence these answers are correct.