1. Consider the following market. There are two contracts A and B available. Contract A is priced at $16 today and it delivers 2 gallons of oil and 4 bushels of corn tomorrow. Contract B is priced at $12 today and it delivers 3 gallons of oil and 2 bushels of corn tomorrow. If someone offers a new contract that delivers 12 gallons of oil and 11 bushels of corn tomorrow, what would be the price today of this new contract? A. $50 B. $52 C. $55 D. $57 E. $60 5. The current USD/CAD exchange rate is 1.25 CAD per USD. If the continuously compounded annual interest rate is 0.5% in U.S. and 1% in Canada, what is the forward exchange rate in units of CAD per a unit of USD in 3 years from now? A. 1.21 B. 1.23 C. 1.27 D. 1.29 E. 1.45 6. A crude oil futures price expiring in 9 months from now is $150 while the spot price of crude oil is $145. Assume that the risk-free rate is 5% and storage yield of crude oil is 2%, both in continuously compounded annual terms. What is the implied convenience yield of crude oil in continuously compounded annual terms? A. 2.2% B. 2.5% C. 2.7% D. 2.8% E. 3% 7. Assume the Capital Asset Pricing Model (CAPM) hokis. Company C's stock has market beta of 1.6. If a trader wants to fully hedge its exposure to a company C stock by using the futures contract written on the market index, what is the appropriate number of futures contracts she needs to take a short position? Company C's stock is traded at $100 per share currently. A trader has 5,000 shares of company C. The market index futures prices is $2,000 currently where one futures contract is written on 100 times the index, A. 3 Futures contracts B. 4 Futures contracts C. 5 Futures contracts D. 6 Futures contracts E7 Futures contracts