For question 1, I’d go with B. Since the foreign stock is hedged, currency risk is hedged away and won’t affect the return. Therefore, it shouldn’t be answer A. As for C, interest rate parity says that the interest rate differential will have an offsetting effect on the currency hedge, so this won’t affect the overall return. That just leads to answer B. Stock volatility in the foreign market will increase the risk premium of the foreign stock and thus lower its price. Then again, I could be wrong since I would think arbitreurs could step in and eliminate the volatility differential.
For question 2, I’d say “False” because I don’t think long-term futures would exist if short-term ones were necessarily preferrable. An investor with a long-time horizon would prefer the longer-term futures to lock in a given exchange rate rather than roll-over and find that their desired lock-in rate is no longer offered in the market.