E] I. You can barrow CAD at 3 percent, which is 2 parcem above the swap rate, or at CAD LIB-DR + 1 permit. If you want to borrow fixed rate, what is the hat way: direct, or synthetic {that is. using a oating-rate loan and a swap]? E12. You have an outstanding fixed-for-fixed FIM/DEM swap for FIM 100m, based on a historic spot rate of FIM/DEM 4 and initial 7-year swap rates of 7 percent (DEM) and 8 percent (FIM) The swap now has three years to go, and the current rates at FIM/DEM 4.5. 6 percent (DEM three years) and 5 percent (FIM three years). What is the market value of the swap contract?E12. You have an outstanding fixed-for-fixed FIM/DEM swap for FIM 100m, based on a historic spot rate of FIM/DEM 4 and initial 7-year swap rates of 7 percent (DEM) and 8 percent (FIM) The swap now has three years to go, and the current rates at FIM/DEM 4.5, 6 percent (DEM three years) and 5 percent (FIM three years). What is the market value of the swap contract?ME1. On January 2 the six- and nine-month interest rates are 5 - 5.125 and 5.5 - 5.6125 percent p.a., respectively. (a) Use the Law of the Worst Possible Combination, discussed in Chapters 1 and 4, to derive the synthetic forward bid interest rate, p.a.; what loans or deposits are used to construct a synthetic forward deposit? (b) Do the same for the synthetic ask rate.ME. Using the same data, compute the: term structure of yields at par for loans with constant annuities. 11. Which of the following is not an example of the destruction of nature's "free services" consumed by the human economy? a. destruction of the honeybee's ecosystem b. forest fires in Indonesia and Malaysia c. increasing buffer areas of native vegetation d. reducing the planet's number of species e. replacing a forest watershed with a plantation 12. A focus of Flavin's article, "Last Tango in Buenos Aires," is on a negotiations concerning a global climate treaty. b. reduction in carbon dioxide emissions. c. the recent increasing surface temperatures. d. all of the above is correct e. none of the above is correct 13. According to Professor Dustin Becker, evaluating a forest according to its total economic value means including a. existence value, such as the preservation of songbirds. b. indirect value, such as the contribution to watershed protection. c. optional value, such as the potential from tourism. d. all of the above are correct e. none of the above is correct 14. According to Ochapa Onazi, major environmental issues in Nigeria are a devastation to farm lands and river systems from oil exploration. b. desertification from the Sahara desert. c. soil erosion. d. all of the above are true e. only a and c are correct 15. Scientists expect that global climate change during the 21" century will a. make Kansas's climate become more like North Dakota's today. b. raise sea level. c. reduce polar temperatures. d. reduce tropical cyclones in Bangladesh.2. You wish to buy CHF forward one year against the USD. Euro USD rates = 5.0% Euro CHF rates = 4.0% Spot = 1.52 USD/CHF Forward points Forward rateE3. On January 2, you sign a six-to-nine month FRA for FRF 10m at 10 percent p.a.. Six months later the three-month LIBOR rate turns out to be 8 percent p.a. (a) What is the cash settlement on July 2? (b) What are the cash flows that arise from a similar Forward Forward? (c) Which of the two (the FRA or the FF) has the higher present value (on July 2)?ME1. On January 2 the six- and nine-month interest rates are 5 - 5.125 and 5.5 - 5.6125 percent p.a., respectively. (a) Use the Law of the Worst Possible Combination, discussed in Chapters 1 and 4, to derive the synthetic forward bid interest rate, p.a.; what loans or deposits are used to construct a synthetic forward deposit? (b) Do the same for the synthetic ask rate.ME3. In Section 9.1.4., we valued an FF via replication. Value the same contract using a hedging argument-that is, an investor can lock in his gain (or stop his loss), by closing the outstanding FF with a reverse FF at the current market conditions