answer q5

Corporate Finance, Final. Fall, 2022. Q1. In India, the spot rate is 50(Rp/$). You want to buy a statue that costs you 40 Rupees. 5 pt. So, you need to have (\$) to get the statue. Q2. We have spot rates of 100(/$),1.5($/) and 120(/). 15 pt. The cross rate of yen to pound is ( Between yen and pound, ( ). Thus, with $100 you just borrowed, ) is expensive. you will have earned a free gain of ) after one round trip. Q3. The spot exchange rate of US dollar to euro is 1.2. 15 pt. The nominal interest rates in US and Europe are 5% and 8%, respectively. If IRP holds, the one year forward rate F(/$) should be ( If UIP holds, the expected spot rate (/$) in one year from now is ( Suppose the real interest rate in the US is 2%. If Fisher effect holds, the inflation rate in Europe is ( \%). Q4. You have the follnisinn 20pt. The intrinsic value of Dec. 90 call is ( The speculative value of Dec. 90 call is ( Q5. Among Dec. 80 call and Dec. 85 call, ( 15 pt. The correct arbitrage trade will earn you (\$ (show your calculation) ), and that of put is ( ). ), and that of put is ( ). ) is mispriced, because ( short wording ). ) immediately. ) is mispriced, because ( short wording ). ) immediately. ). Q6. Among Dec. 90 call and Dec. 95 call, ( 15 pt. The correct arbitrage trade will earn you (\$ If the stock price is $110 on expiration, your payoff from the above arbitrage trade will be ( $ ). ). You have the follnusina nntinn % ). (show your calculation) Q7. pt. The put written on its stock, which have the same features as the call above, should be selling at ( ). (show your calculation using simple interest instead of continuous compounding) Today it decides to change its corporoate form to sole proprietorship. Then, immediately, the market cap declines by ( H so that the new market cap be ( H ), (culation using simple interest ( $ ). (show your calculation using simple interest instead of continuous compounding)