Q7. Holding other factors constant, which of the following will increase when volatility () increases? (A) American put option price (B) European put option price (C) European call option price (D) All of the above Answer: Q8. Starbucks wants to borrow Euro at a fixed rate of interest. Adidas wants to borrow US dollar at a fixed rate of interest. In terms of borrowing costs, they face the following rates per annum: To create a Swap contract between Starbucks and Adidas, which of the following is Correct? (A) Adidas has comparative advantage in Euro; Starbucks has comparative advantage in US dollar (B) Starbucks has comparative advantage in both Euro and US dollar (C) Adidas has comparative advantage in both Euro and US dollar (D) Starbucks has comparative advantage in Euro; Adidas has comparative advantage in US dollar