1.Youmanage a 50 million euros portfolio of German stocks, which you decide to hedge in full using DAX futures contracts. The DAX index currently stands at 13,076.72 and the nearby DAX futures contract at 13,122.30. As per the futures contract specification, each DAX point is worth 25 euros. Therefore, your naive hedging strategy should beto:

A.Buy 152contracts

B.Sell 152contracts

C.Buy 153contracts

D.Sell 153contracts

2.Yousell a JPY 1 billion "3 against 6" FRA with an agreed rate of .75%. At the settlement date, 3-month euroyen deposits yield .42%. Assuming a period of 92 days, the buyer's payment to you will be closestto:

A.JPY 831781

B.JPY842,429

C.JPY843,333

D.JPY 1,072,182

3.Assume the exchange rate between the euro and the Swiss franc is currently tradingat S[EUR/CHF] = .9206.Youobserve the three month forward rate is .9258. From this information alone, relative to the Swiss franc you can conclude the eurois:

A.At a forward discount, and the euro/Swiss 3-month interest differential is 2.25% p.a.

B.At a forward discount, and the euro/Swiss 3-month interest differential is .56% p.a.

C.At a froward premium, and the euro/Swiss 3-month interest differential is .56% p.a.

D.At a froward premium, and the euro/Swiss 3-month interest differential is 2.25% p.a.