1. Term structure of interest rates and swap valuation Suppose the current term structure of interest rates, assuming annual compounding, is as follows: 51 7.0% 7.3% 7.79% 8.1% 8.4% 8.8% What is the discount rate d(0, 4)? (Recall that interest rates are always quoted on an annual basis unless stated otherwise.} Please submit your answer rounded to three decimal places. For example, if your answer is 0.4567 then you should submit an answer of 0.457. Enter answer here 2. Swap Rates Suppose a 6-year swap with a notional principal of $10 million is being configured. What is the fixed rate of interest that will make the value of the swap equal to zero? (You should use the term structure of interest rates from Question 1) Please submit your answer as a percentage rounded to two decimal places. For example, if your answer is 4.567% or equivalently 0.04567, then you should submit an answer of 4.57. Enter answer here 3. Hedging using futures Suppose a farmer is expecting that her crop of oranges will be ready for harvest and sale as 150, 000 pounds of orange juice in 3 months time. Suppose each orange juice futures contract is for 15, 000 pounds of orange juice and the current futures price is Fo = 118.65 cents-per-pound. Assuming that the farmer has enough cash liquidity to fund any margin calls, what is the risk-free price that she can guarantee herself? Please submit your answer in cents-per-pound rounded to two decimal places. For example, if your answer is 123.456, then you should submit an answer of 123.47