Put options with lower strike price are cheaper

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Reference no: EM132004006

TRUE or FALSE? (No explanation required, just write true or false)

__________ Put options with lower strike price are cheaper (have lower option premium).

__________ The bid-ask spread for forward rates is larger than for spot rates.

__________ If UIRP/UH holds, hedging has a premium.

__________ Per CIRP, the forward premium is approx. equal to the interest rate differential between two currencies.

2. TRUE or FALSE? (No explanation required, just write true or false)

__________ Futures and forward rates are always exactly the same

__________ If Absolute PPP holds, the real exchange rate is a constant.

__________ In pegged exchange rate systems, the exchange rate never changes

__________ Carry-trade strategies rely on the existence of a risk premium for holding high-interest currencies.

Reference no: EM132004006

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