1) Suppose that a party wanted to enter an FRA that expires in 42 days and is based on 123-day LIBOR. The dealer quotes a rate of 0.0437 on the FRA.Assume that at expiration, the 123-day LIBOR is 0.0229, and the notional amount is USD15,000,000. What is the payoff of the FRA LONG position?

2)Suppose our underlying is a stock XYZ. Today (t=0), XYZ is priced at $1,034.The storage and insurance cost is $12, paid in advance. The forward contract uses XYZ as the underlying, which will expire in one year from today. The interest rate is 0.048.The forward price at today (t=0) is $1,292.

What is the arbitrage profitthat you can make today based on cost-of-carry model,if you are only allowed to either long or short one forward contract (i.e.do not assume the arbitrage profit is unlimited in this particular case)?

3)A US-based exporter anticipated receiving 1000British Pound(GBP) in six months, and took a short forward position, locking-in an exchange rate of $1.34/GBP. If six months later at maturity, thespot exchange rate becomes $1.35/GBP,what is the payoff of the exporter?