1. You enter into a two-year variable notional swap of equity returns for 6-month Libor with semi-annual payments on both legs. The initial swap notional is $100 million, the Libor rate at inception of the swap is 7.2%, and the realized raw equity returns during the first 6-month period is 6.3%. The first 6-month period has 183 days. The notional principal of the swap entering the second 6-month period is

		(a) $103.15 million.
		(b) $103.20 million.
		(c) $103.66 million.
		(d) $106.3 million.

2. A US-based investor enters into an unhedged cross-currency equity swap in which he pays returns on the S&P 500 index in dollars in exchange for receiving the returns on the FTSE 100 in pounds. At inception, the notional principal on the swap is $100 million, and the exchange rate is $1.60 = 1. Cash flows are exchanged every six months and the first six-month period has 182 days in it. At the end of the first six-month period, the raw returns on the S&P 500 are 8% and the raw returns on the FTSE 100 are 9%. The exchange rate at this point is $1.50 = 1. The investor's net cash flow on this first payment date is

		(a) $1million.
		(b) 0.165 million.
		(c) 0.438 million.
		(d) 1 million.