II. Which of the following is/are correct? Select all that apply. (2 marks) Select one or more: a. In a long forward position, the forward price locks in the buying price of the underlying delivered in the future on the maturity date of the contract, the price is also paid then. b. Derivatives are zero-sum financial instruments in that the profits made by the long comes at the expense of the short C. In over-the-counter contracts, two counterparties deal directly with each other, and are directly exposed to credit risk from the other party d. When asset price is strongly positively correlated with interest rates, futures prices will tend to be slightly higher than forward prices III. Which of the following is correct? Select all that apply. (2 marks) Select one or more: a. We assume the following for all pricing in the course: no transaction costs; borrowing and lending can be done at the same risk-free rate; and arbitrage opportunities are immediately recognized and exploited Ob. The Black-Scholes-Merton model is a fundamentally intuitive model based on the difference in the present values of expected payoff from the option and expected payment to be made c. The Black-Scholes-Merton model is a pricing approach based on relative pricing d. You write a 0.5 call on a stock that is trading at US$0.0005 per share. You will likely earn nothing for your position