1. An oil producer plans to sell 1 million barrels of crude oil one year from now. The oil price in one year is normally distributed with the mean of $80 per barrel and the standard deviation of $12 per barrel. What is the probability that the sales revenue is lower than $50 millions?

(a) 0.62% (b) 41.75% (c) 58.25% (d) 99.38%

2. Consider a 3-year forward contract on a corporate bond. The bond will provide $20- coupon in year 1 and $30-coupon in year 2. The bond currently sells for $980. The risk-free interest rate is 3% per annum. What is the 3-year forward price?

(a) $960.73 (b) $1,020.14 (c) $1,051.05 (d) $1,072.29