A. You have just received the following information from your broker regarding spot rates. 3-month KLIBOR = 6.5% (90 days maturity) 6-month KLIBOR = 8.5% (180 days maturity) Given these rates, 1. What is the implied forward rate ? 2. What is the correct price of a 3-month KLIBOR futures contract ?

B. A stock is currently selling at RM 10.00. An at-the-money call option with 30 days to maturity is being quoted RM 0.90. Assume there are 4 other 30 day options on the stock. These are a RM 9.00 put option, a RM 9.00 call option and a RM 12.00 call and put option. 3. Of the 5 available options, which is likely to have the highest price ? Which is likely to have the lowest price ? 4. Which option(s) will gain in value if the underlying stock rises to RM 11.00 ? Rank by order of likely increase. 5. Which option(s) will gain in value if the underlying stock goes to RM 8.00 ? Rank by order of likely increase.