1. An investment bank pays $ 20.50 per share for 3 million shares of X. It then sells these shares to the public for $ 22.50 per share. How much money does X receive ? What is the profit to the investment bank ? What is the stock price of X ? 2. A mutual fund owns 500 shares of X currently trading at $ 12, and 300 shares of Y, currently trading at $ 24. The fund has 900 shares outstanding. a.What is the Net Asset Value of the fund ? b.If investors expect the price of X shares to increase to $ 14, and Y shares to decrease to $ 23, at the end of the year, what is the new NAV ? c.Assume that the expected price of X shares is realized at $ 14. What is the maximum price decrease that can occur to Y to realize an end of year NAV equal to the NAV estimated in (a).

3. Assume that a bank has assets located in the EU worth 101 million euros, on which it earns an average of 9% per year. The bank has 76 million Euros in liabilities on which earns an average of 5% per year. The spot exchange rate is 0.76 euros/$. a.If the exchange rate at the end of the year is 0.79euros/$, will the dollar have appreciated or depreciated against the euro ? b.Given the change in the exchange rate, what is the effect in dollars on the net interest income from foreign assets and liabilities ?

4. Consider the following balance sheet for X Savings (in milllions).

Assets

Floating rate mortgages $ 40

(Currently 9% annuall7)

30-year fixed rate loans

(Currently 6% annuall7) 40

Total Assets 80

Liabilities and Equity

1-year time deposits

(currently 5% annually) $ 50

3-year time deposits

(Currently 7% annually) 20

Equity 10

Total liabilities and equity 80

a.What Is X