1) Suppose the dealer provides these spot rate quotes: S($|) 1.8505 05 & S($|) 1.5250 15. a) Jack has 5,000 and wants to receive . How much , to 2 decimal places, will he get if he transacts with this dealer?

b) Jill purchases a 10-year zero-coupon Bulldog bond with the par of 1 Million. The bond YTM is 4%. At the purchasing date, he converts the USD to using the dealers quote. At maturity, he converts at an exchange rate of $1= 0.5475. Calculate his annual return for this investment, round to 4 decimal places.

2) The dollar-yen 1-year forward rate is $1=108.5000.

a) A dealer quote the dollar-yen exchange rate is S(|$) 108.7500-10. Calculate Jennys annual return if she buys 1 million via the dealer at the spot exchange rate and sells them forward, round to 4 decimal places.

b) Suppose that the dollar-yen forward premium is 4%. Calculate the spot rate, $1=_______, round to 4 decimal places.

3) From a recent trip, you recall a spot exchange rate of $4.65 = 4 and a 1-year forward rate of 4=$4.75. a) Suppose that the interest rates are 2% APR in the UK. Under IRP, what is the no-arbitrage 1-year interest rate in the US? Round to 4 decimal places.

b) What is forward annualized holding period return, round to 4 decimal places?

4) Yesterday, you entered into a futures contract to sell 62,500 at $1.4550 per Euro. Your initial performance bond is $1,500 and your maintenance level is $1,250.

a) At what settle price, $____/, will you get a demand for additional funds to be posted, round to 4 decimal places? b) Suppose the futures price closes today at $1.4280. What is your bond ending balance, nearest cents?

5) The price for a call option contract on 100 shares of XYZ stock, at a strike price of $100/share at the expiry date in 12-months is $40. The price for a put option contract on 100 shares of XYZ stock, at a strike price of $100/share at the expiry date in 12-months is $35.

a) Suppose the current stock price is $100.15. What is the difference between the time value of the call option subtract the time value of the put option? Round to the nearest cents.

b) Assume Jane shorts a call and longs a put, and she funds for her transactions at 5% rate. Calculate her position (gain/loss), to nearest cents, assume the stock price is $100.5 at maturity.