please answer all or dont answer any!

1 II III L. II. III 1) Which of the following statement(s) is/are false? Relative to the Purchasing Power Parity (PPP), the Interest Rate Parity (IRP) are violated (evidence against it) more often. As the purchasing power of a currency sharply declines (due to hyperinflation) that currency will appreciate against stable currencies According to the Purchasing Power Parity (PPP), the prices of standard commodity baskets in two countries are related a) I only d) I and II only b) II only e) None of the above answers c) III only 2) 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 answers 3) Which of the following statement(s) is/are true? If you want to buy from the dealer, you'll transact at the bid price. Unlike options, parties in future and forward contracts are legally bounded to settle their positions, even if the positions are unprofitable. If you want to hedge oil price 6 months later, then you should use the forward market rather than the spot market a) I only d) II and III only b) II only e) None of the above answers c) III only 4) Which of the following statement(s) is/are false? 1. At year start, the spot rate was $1.50 = 1 and at year end, the spot rate is $1.45 = El. This means the pound has appreciated II. If you want to hedge but worry about the counter party risk, then you should use the forward market rather than the future market. III. Compare to the spot market, the forward market has less counterparty risk. a) I only d) I and III only b) II only c) None of the above answers c) III only 5) Assume the strike price is equal to the current stock price. If you think the stock price will remain the same months from now, which option(s) do you take to generate a gain? 1 Short a call option Short a put option III. Long a call option IV. Long a put option a) I & II d) III & IV b) 1 & IV e) None of the above answers c) II & III 6) Investors will generally accept a lower yield on than on of comparable terms, making them a less costly source of funds for the issuer to service. a) Illiquid bonds; liquid bonds d) Domestic bonds : Eurobonds b) Regular bonds, warrant-linked bonds e) None of the above answers c) registered bonds; bearer bonds IL