1. Which of the following statement(s) is/are false?

1. Buying a call option is the same as selling a put option.
2. If an option is out of the money, then the holders should exercise it to capitalize the gains.
3. Prior to maturity, an American option will always cost more than a similar European option.

1. I only
2. II only
3. III only
4. I and III only
5. None of the above choices

2. How of the following statement(s) is/are false?

1. Price discovery in the primary stock markets occurs due to the competitive trading between buyers and sellers, just like on eBay.
2. A liquid stock market is one in which prices reflect price and volume information quickly.
3. A market with higher turnover is associated with higher liquidity, all else equal.
4. All else equal, a liquid stock has higher price than a non-liquid stock.

1. 0
2. 1
3. 2
4. 3
5. 4