6) For European options, what is the effect of an increase in current stock price?

a) Decrease the value of calls and puts ceteris paribus

b) Increase the value of calls and puts ceteris paribus

c) Decrease the value of calls, increase the value of puts ceteris paribus

d) Increase the value of calls, decrease the value of puts ceteris paribus

e) None of the above choices

7) Which of the following statement(s) is/are true when IRP fails to hold?

I. pressure from arbitrageurs should bring exchange rates and interest rates back into line.

II. it may fail to hold due to transactions costs.

III. it may be due to government-imposed capital controls.

a) I only

b) II only

c) III only

d) I, II & III

e) None of the above choices