Financial Derivatives (FIN429) Thursday 10-May-2018 QUESTION # 5 Consider Company X and Company Y who are interested to make an interest rate swap with each other. Following are the interest rate quotes that they get from their respective banks. Based on the quotes, in which market Company X has a comparative advantage? Why? [Max. Marks = 1+2] Companies Quotes FloatingFixed Prime + 2%-1% Prime-1 % | 9.5% ANSWER [Max. Marks 2] QUESTION # 6 A stock price has an annual expected return of 9% and a volatility of 20% per annum, what will be two standard deviation semi-annual move in stock prices if stock is currently selling at $52