state whether the following is true or false with one line of explanation

a.

A stocks price is estimated using Constant-growth Dividend Discount Model (formula below).

where P0 is the current price, D1 is the divided at time period 1, ke is the cost of equity and g is the growth rate. After a negative announcement, the growth rate g estimate decreased (new growth rate g > g) without changes in forecast of D1. This event leads to a drop in price, P0 > P0.

We conclude that: because of the good news, the expected return for new investors (buying at the new price P0) is now higher.

b.Consider a forward contract on Euros with a forward rate of $1.70. On the maturity date, the long party would pay $1.7 million AUD in exchange for 1 million Euros from the short party. If Shane wants to speculate on the value of the Euro, and believes the Euro will go down in value, he should enter a long position on this forward contract

c.Other things being equal, higher volatility of the underlying asset leads to higher value of both call and put options.

d.Assume a hedger who is short in a gold futures contract has to close out her position prior to futures maturity. The decrease in basis benefits the profitability of her position.