1. Forward contracts are marked to market, while future contracts are not. True False
2. Usually people or companies with high risks are more likely to purchase insurance. This is called adverse selection. True False
3. The risk that an unfriendly government might expropriate a firm's assets is political risk. True False
4. When we compute the free cash flow to evaluate a firm using the weighted average cost of capital (WACC) as the discount rate, we should deduct interest expense because firms do pay interests as expense. True False
5. In general, the countries with higher interest rates tend to have higher inflation rates. True False