Classical

Advanced Questions - Section 3

21:  

Members of the EU find that trade creation is fostered when their economies are

A.

highly competitive

B.

highly noncompetitive

C.

small in economic importance

D.

geographically distant

 
 

Option: A

Explanation :


22:  

A tariff that prohibits imports has only

A.

a revenue effect and redistribution effect

B.

revenue effect and protection effect

C.

consumption effect and protection effect

D.

redistribution effect and consumption effect

 
 

Option: C

Explanation :


23:  

Out of 4 factors i.e. (i) Dividend Yield (ii) Market Interest, Rates (iii) Time to Expiry, and (iv) Price volatility, which affect the premium of an option?

A.

(i), (ii), and (iv)

B.

(ii), (iii), and (iv)

C.

(ii), and (iv)

D.

(i), (iii), and (iv)

 
 

Option: D

Explanation :


24:  

Given free trade, small nations tend to benefit the most from trade since they

A.

Are more productive than their large trading partners.

B.

Are less productive than their large trading partners.

C.

Have demand preferences and income levels lower than their large trading partners.

D.

Realize terms of trade lying near the MRTs of their large trading partners.

 
 

Option: D

Explanation :


25:  

If Strike price is more than the spot price of the asset, the call option is known as

A.

American Option

B.

European Option

C.

Out of Money Option

D.

In the Money Option

 
 

Option: C

Explanation :




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