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kindly solve the 5 parts of the problem Problem 10 1. The role of financial derivatives can be summarized by: a. Speculation and management b.

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Problem 10 1. The role of financial derivatives can be summarized by: a. Speculation and management b. Speculation and hedging O c. Hedging and management d. Management and making profit O e. None of the above 2. While trading on organized exchanges, which of the following is NOT considered as a contract specification for futures contracts? . a. Size of the contract O b. Maturity date c. Last trading day d. All of the above are specified. O e. None of the above 3. As a general statement, it is safe to say that businesses generally use the for foreign currency option contracts, and individuals and financial institutions typically use the a. exchange markets; over-the-counter b. over-the-counter; exchange markets c. private; government sponsored O d. government sponsored; private O e. None of the above 4. What two general conclusions can be made from the empirical tests of purchasing power parity (PPP)? a. PPP holds up well over the short run but poorly for the long run and the theory holdsbetter for countries with relatively low rates of inflation. b. PPP holds up well over the short run but poorly for the long run and the theory holdsbetter for countries with relatively high rates of inflation. C. PPP holds up well over the long run but poorly for the short run and the theory holdsbetter for countries with relatively low rates of inflation. d. PPP holds up well over the long run but poorly for the short run and the theory holdsbetter for countries with relatively high rates of inflation. e. None of the above 5. A writer of a put has: a. Profit limited to the premium O b. Unlimited loss potential c. Unlimited profit potential d. A & B O e. None of the above

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