1. Assume you have $12,750 that you want to invest in euro call options. The Strike price is $1.3470/ and the premium is $0.0017/. If the size of the euro option contract is 62,500, how many contracts can you buy with yours $12,750 (rounded to the nearest whole number)?
   1. 60 contracts
   2. 9,465 contracts
   3. 43 contracts
   4. 120 contracts
   5. 3,750 contracts
2. Bank A quotes a bid price of $1.4820/ and an ask price of $1.4940/ for the British pound. Bank B quotes a bid price of $1.5260/ and an ask price of $1.5380/ for the British pound. If a trader starts with a nominal 500,000, what should the trade do to take advantage of locational arbitrage and how much profit would the trader make?
   1. Sell pounds at Bank A, buy pounds at Bank B, make 10,709.
   2. Sell pounds at Bank B, buy pounds at Bank A, make 10,709.
   3. Sell pounds at Bank B, buy pounds at Bank A, make $14,726.
   4. Sell pounds at Bank A, buy pounds at Bank B, make $18,893.
   5. Sell pounds at Bank B, buy pounds at Bank A, Make 14,726.