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Question
Consider a call option; in terms of the option writer and option holder, who is the buyer? Who is the seller? Finally, who has the option? Explain.Answer
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Differences in inflation rates between two countries can explain: A. short-run changes in the exchange rate but not long-run changes.B. changes in the real exchange rate over the long run, but not changes in the nominal exchange rate.C. long-run changes in the exchange rate but not short-run changes.D. changes in the exchange rate in both the short run and the long run.
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The empirical evidence on purchasing power parity seems to point out that: A. purchasing power parity can explain long run movements in exchange rates but does not hold up to scrutiny for short-run changes.B. purchasing power parity does a good job of explaining short-run movements in exchange rates, but does not hold up to scrutiny over the long run.C. purchasing power parity is a good theory for international trade, but is of little use in explaining exchange rate movements.D. inflation and a country's rate of currency appreciation are positively correlated.
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Compare/contrast the Nasdaq Composite Index with the Dow Jones Industrial Average.
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Some good did come from the internet bubble of the late 1990s. One good thing was that: A. people learned they should not invest in dotcom companies.B. start-up companies found they could bypass venture capitalists and raise funds directly from the capital markets.C. stock market bubbles do not have to result in an inefficient allocation of resources.D. the theory of efficient markets doesn't always hold and consistently better-than-market returns are achievable.