One i thought was interesting… When adding exposure to equities in a foreign market to your portfolio, which of the following strategies would offer the lowest amount of currency risk? In: A) the foreign derivatives market going short call options on an index on the foreign market. B) your domestic derivatives market going long call options on an index on your domestic market. C) your domestic derivatives market going long call options on an index on the foreign market. D) the foreign derivatives market going short call options on an index on your domestic market. Your answer: D was incorrect. The correct answer was C) your domestic derivatives market going long call options on an index on the foreign market. You would want to go long call options on the foreign index. You can choose to purchase calls on the index and would only have the initial premium committed (i.e., exposed to translation risk). Further, you may find the desired call options traded on your domestic exchange. In this case, translation risk is totally eliminated, because the premiums are stated in your domestic currency.