. True or False. If the following statements are true, put a in the corresponding

parenthesis, otherwise, put a . [2 points each]

(1) According to Relative Purchasing Power Parity, if expected inflation rate is 2.5% in the US

and 3% in Canada, US dollar will appreciate in the future, relative to Canadian Dollar.

( )

(2) Stock repurchases will typically decrease stock prices and give investors less control over

their tax liabilities. ( )

(3) If a companys expected EBIT in the coming year is more than the break-even EBIT, then the

increase in Debt/Equity ratio may be beneficial to its stockholders. ( )

(4) If the underwriters are concerned with the possibility of oversubscription of IPO shares, they

can have a best efforts contract with the IPO company.