A$)$ Blackwater is an Irish firm which recently bid on a contract to supply goods to a British company. Blackwater will find out on $31$st March whether or not it has been awarded the contract. If Blackwater is awarded the contract then it will receive payment in British pounds of $657,111$ on $31$st July. When Blackwater submitted its bid, it purchased a $657,111$ put option from its bank. This option has an exercise date of $31$st July and a striking price of $0\mathrm{.}87=1.$ Required: Prepare a memo for Blackwater Ltd$.,$ advising what steps it should take on $31$st July in each of the following situations. Supported your answers with detailed calculations. Contract awarded to Blackwater on $31$st March? Spot rate on $31$st July Situation $1$: Yes $0\mathrm{.}83=1$ Situation $2$: No $0\mathrm{.}91=1$

B$)$ Margaret and Kate are diversified investors. Each of them has invested in a profesiionally managed investment fund. The following data reflects the most recent annual performance of these investment funds: Net returns to investors Fund systematic risk $(\backslash$beta $)$ Margaret$$s fund: $15\mathrm{.}4\%1\mathrm{.}9$ Kate$$s fund: $12\mathrm{.}3\%1\mathrm{.}2$ It should be assumed that the risk$-$free rate of interest $($rF$)$ is $3\%$ and that the expected return on the market portfolio E$($rM$)$ is $10\%.$ Required: Explain $($with detailed supporting calculations$)$ whether Margaret and$/$or Kate should be satisfied with these net returns from their investment funds.