10 Points Question 1 Consider the toss of a (loaded) coin. In a "good" outcome, punter (bettor) will receive 1 in 12 months. In a "bad" outcome she will not receive anything. The fair market price of this bet is 0.45 and current prevailing risk-free interest rate is 5%. What is the implied probability of a "good" outcome? Assume discrete compounding. A 0.4235 B) 0.4725 0.5275 0.5725 Question 2 10 Points Which of the following statements is correct? The overall size of the derivatives worldwide is bigger than the size of all listed stocks B Derivatives can only be used to hedge risks Of all traded assets, only the size of the US government bonds market is bigger than the derivatives market Derivatives are relatively safe assets that rarely cause any large scale financial disturbances