Evaluate each of the following statements (True or False).

1. Even if US multinational firms have a diversified portfolio of different currencies, the foreign exchange risk is likely still unavoidable, because the changes in values of foreign currencies against the US dollar are positively correlated.
2. Firms should attempt to hedge only the next exposure for each currency in each period because transaction costs are proportional to the total notional amount.
3. Compared with an option contract with a far expiration date, a contract with a relatively near expiration date should have a relatively low premium when it is purchased but will command a relatively high premium when the option position is closed.