Question: 1. In operating risk, the goal is to decrease the effect of ________ on firm cash flows. a. Nominal exchange rate moves b. Real exchange

1. In operating risk, the goal is to decrease the effect of ________ on firm cash flows. a. Nominal exchange rate moves b. Real exchange rate moves c. Interest Rate Parity d. Loan rate differentials

2. The _______ the price elasticity of demand, the _____ the incentive to hold down price and thereby expand sales. a. lower, greater b. lower, lower c. greater, lower d. greater, greater

3. The time value of an American option a. is always positive for an outofthemoney option b. is always positive for an inthemoney option c. decreases with the time that remains until the option expires d. all of the above e. none of the above

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