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.