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PLEASE EXPLAIN AND SHOW WORK!

1.Interest rate swap: Consider an interest rate swap for a principal amount of $30 million. The fixed interest rate is 7 percent, paid QUARTERLY on the basis of 90 days in a quarter and 360 days in a year. The first floating interest rate payment is set at 7.2 percent. Calculate the first net payment.

$15,000

$20,000

$540,000

None

Consider an option with the following data: S = 50, E = 45. If you buy the PUT for 6, calculate the breakeven stock price

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All other things held constant, premiums on put options will increase when the

exercise price increases.

volatility of the underlying asset falls

Both true