ANSWER USING BOTH EXCEL AND MANUAL WORKINGS.

1. The spot exchange rate for USD in Singapore is 1.2075-83 SGD/USD. The interest rate in USA is 5% and in Singapore is 4%. Calculate 90-day forward rate assuming 360 days in a year.

2.XYZ Corporation shares are selling at $25 on January 1, 2013. There is a call option available with exercise price of $26 and maturity in 60 days. The price is expected to either increase by 8% or decrease by 4% at the maturity of options. If the risk free rate is 4%, calculate the call option price using binomial model.