Gain Your Investment with Currency Option Chain

Nov. 2, 2014 - PRLog -- A contract that grants the holder the right, but not the obligation, to buy or sell currency at a specified exchange rate during a specified period of time. For this right, a premium is paid to the broker, which will vary depending on the number of contracts purchased. Currency options are one of the best ways for corporations or individuals to hedge against adverse movements in exchange rates.

Easylivedata.com can hedge against foreign currency risk by purchasing a currency option put or call. For example, assume that an investor believes that the USD/EUR rate is going to increase from 0.80 to 0.90 (meaning that it will become more expensive for a European investor to buy U.S dollars). In this case, the investor would want to buy a call option on USD/EUR so that he or she could stand to gain from an increase in the exchange rate (or the USD rise).

CURRENCY TRANSLATION: The process of quoting the amount of money denominated in one currency in the denomination of another currency on a balance sheet. Currency translation is done using current exchange rates. The Financial Accounting

Standards Board (FASB) requires multinational corporations to list all assets and liabilities in terms of its native currency. The currency translation is recorded on the corporate balance sheet as an equity account. Large banks include foreign adjusted currency translation as equity capital. Corporations must report any earnings from foreign subsidiaries in their translations, as well.

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