1)

T or F

3) An unbiased predictor of future exchange rates is a predictor that is almost always correct.

4) Foreign currency futures contracts involve a commitment to buy or sell a currency at a later date.

5) Buying a put option gives you the right to buy something at a fixed price.

6) A call option that is in-the-money has a strike price that is higher than the current spot rate.

7) The option premium should not affect the decision to exercise the option.

8) An example of repricing risk for a borrower is LIBOR increasing rapidly.

9) Sovereign debt is debt issued by private corporations.

10) A company that has domestic debt but adds a new foreign customer (paying in a different currency) could hedge risk via a cross-currency swap.

11) Credit spreads are higher for higher-credit-quality firms.

12) The asset market approach argues that exchange rates are affected by things like economic growth, politics, and corporate governance.