1 . Which of the following is not correct?

Choices:

• Premium arises when the spot rate is higher than that of the forward rate
• Indirect quotation shows the number of units of a domestic currency corresponding to one unit of foreign currency
• Financial effects of possible stock market crashes can be mitigated through purchasing and holding golds
• Exchange rates is one of the vital factors in considering whether or not to invest in a security issued by entities from the other countries

2 . Which is not true with regards to risk management?

Choices:

• Bankruptcy that arises from volatility of cash inflows can be mitigated through proper risk forecast and management
• Securities may be subjected to security price risk
• One of the ways to mitigate relevant risk is to increase the probability of occurrence of an adverse event
• Identifying the risk that the firm faces is the first step in risk management