1- The 3-year interest rates in Australia and the United States are 5% and 2%, respectively, and the spot exchange rate is 0.7500 USD per AUD. What is the 3-yearforward exchange rate?

Assume that the domestic rate is the Unites States rate.

a.

0.820

b.

0.685

c.All other answers provided are not correct

d.

0.727

e.

0.772

The answer should be 0.685 but how ?

2- Calculate the zero rate implied by a bond trading at $94 and maturing in six months. Assume that the par value of the bond is $100.

a.0.1238

b.0.0103

c.0.0619

d.0.0909

the answer should be 0.1238 but how?

3- Suppose that an investor enters into a futures contract to sell silver for $16.80 per ounce. The size of the contract is 5,000 ounces. The initial margin is $3,000, and the maintenance margin is $1,000. Regarding a futures price that the investor will receive a margin call and the additional amount of money that the investor needs to deposit, which of the following statements is the most accurate?

a.A futures price of $17.20; the additional amount of $3,000

b.A futures price of $17.20; the additional amount of $2,000

c.A futures price of $16.60; the additional amount of $2,000

d.A futures price of $16.60; the additional amount of $3,000

The correct answer is: A futures price of $17.20; the additional amount of $2,000

4- A stock index currently stands at 1040. The risk-free interest rate is 5% per annum (with continuous compounding) and the dividend yield on the index is 1.9% per annum.

What should the futures price for an eight-month contract be?

a.$ 1075.25

b.$ 1050.80

c.$ 1018.73

d.$ 1061.72

The correct answer is: $ 1061.72 but how?

5- The yield curve is flat at 6% per annum. What is the value of an FRA where the holder receives interest at the rate of 8% per annum for a six-month period on a principal of $1,000 starting in two years? All rates are compounded semiannually.

a.$7.88

b.$9.82

c.$9.12

d.$8.63

The correct answer is: $8.63 but how?

6- The spot price of silver is $21.7 per ounce. The storage cost is $6 per ounce paid once per year payable in advance. Assuming that the interest rates are 5.4% per annum for all maturities.

Calculate the future price of silver for delivery in 133 days. Assume that all rates are continuously compounded and the days of the year are 365.

a.$ 28.25

b.$ 19.70

c.$ 22.13

d.$ 25.20

The correct answers are: $ 28.25, $ 25.20, $ 22.13, $ 19.70

but how??