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16. The daily percentage change in an exchange rate is compared to a normal distribution with the same mean and standard deviation. 1Which of the
16. The daily percentage change in an exchange rate is compared to a normal distribution with the same mean and standard deviation. 1Which of the following is true A. B. E. D. Both small and large exchange rate moves are more likely than with the normal distribution Small exchange rate moves are less likely and large exchange rate moves are more likely than with the normal distribution Large exchange rate moves are less likely and small exchange rate moves are more likely than with the normal distribution Both small and large exchange rate moves are less likely than with the normal distribution 1?. Which of the following is true as time to maturity increases? A. B. C. D. The volatility smile for currency options tends to become more pronounced The volatility smile for currency options tends to become less pronounced The volatility smile for currency options rst becomes less pronounced and then becomes more pronounced The volatility smile for cu n'ency options remains approximately the same 13. If the volatility implied from an at-the-money put currency option were used to price other put options on the currency. which of the following would be true? A. B. C. Out-of-the money and in-the-money prices would be too high Out-of-the money and in-the-money prices would be too low Out-of-the-money option prices would be too high and in-the-money option prices would be too low Out-of-the-money option prices would be too low and in-the-money option prices would be too high
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