Which of the following is NOT an assumption of market efficiency?

A$)$ Instruments denominated in other currencies are perfect substitutes for one another.

B$)$ Transaction costs are low or nonexistent.

C$)$ All relevant information is quickly reflected in both spot and forward exchange markets.

D$)$ All of the above are true.

Futures contracts require that the purchaser deposit an initial sum as collateral. This deposit is called a:

A$)$ collateralized deposit.

B$)$ marked market sum.

C$)$ margin.

D$)$ settlement.

A speculator that has

A$)$ sold; long a futures contract has taken a $$

B$)$ purchased; short

C$)$ sold: short

D$)$ purchased; sold

Which of the following is NOT a difference between a currency futures contract and a forward contract?

A$)$ The futures contract is marked to market daily, whereas the forward contract is only due to be settled at maturity.

B$)$ The counterparty to the futures participant is unknown with the clearinghouse stepping into each transaction, whereas the forward contract participants are in direct contact setting the forward specifications.

C$)$ A single sales commission covers both the purchase and sale of a futures contract, whereas there is no specific sales commission with a forward contract because banks earn a profit through the bid$-$ask spread.

D$)$ All of the above are true.

A foreign currency $q,$ option gives the holder the right to $$ a foreign currency, whereas a foreign currency $q,$ option gives the holder the right to $$ an option.

A$)$ call, buy, put, sell

B$)$ call. sell, put, buy

C$)$ put. hold, call, release

D$)$ none of the above

A call option whose exercise price is less than the spot price is said to be:

A$)$ in$-$the$-$money.

B$)$ at$-$the$-$money.

C$)$ out$-$of$-$the$-$money.

D$)$ under$-$the$-$spot.