I need answers for these 4 questions. Need it to be solved by Monday. Please help. Thanks.

1. A bank's assets and liabilities both have a duration of 5 years. Is the bank hedged against interest rate movements? Explain carefully any limitations of the hedging scheme it has chosen. 2. Explain what is meant by basis risk in the situation where a company knows it will be purchasing a certain asset in two months and uses a three-month futures contract to hedge its risk. 3. In December 2011, a company expects to buy 100,000 MMBtu of natural gas before the end of March 2012, but does not know exactly when. To hedge against volatile gas prices, it implements a rolling forward hedge by taking a long position on 10 two-month natural gas futures (only held for 1 month). One futures contract is for 10,000 MMBtu and is quoted in $ per MMBtu. The commodity is purchased in March 2012. What is total dollar gain/loss from the rolling hedge? Assume a hedge ratio of 0.8. Date Feb 2012 Futures Price Mar 2012 Futures Price Apr 2012 Futures Price Spot Price Dec 2011 Jan 2012 3.65 3.00 2.95 Feb 2012 2.70 Mar 2012 - 3.67 2.65 2.50 2.50 - 4. A US investor sees an arbitrage opportunity in the currency markets. The spot exchange rate between the Swiss Franc and US Dollar is 1.0404 ($ per CHF). Assume the continuously compounded interest rates in the US and Switzerland are 0.25% and 0%, respectively. The 3-month currency forward price is 1.0300 ($ per CHF). What is the theoretically correct forward price. What is the investor's total profit (in CHF), assuming she begins by borrowing 1,000 CHF? 1. A US investor sees an arbitrage opportunity in the currency markets. The spot exchange rate between the Swiss Franc and US Dollar is 1.0404 ($ per CHF). Assume the continuously compounded interest rates in the US and Switzerland are 0.25% and 0%, respectively. The 3-month currency forward price is 1.0300 ($ per CHF). What is the theoretically correct forward price. What is the investor's total profit (in CHF), assuming she begins by borrowing 1,000 CHF? 2. A stock provides a dividend yield of 5.0% paid semi-annually (equivalent to 4.94% continuously compounded). The spot price of the stock is currently $500, and the riskfree rate is 7.5% with continuous compounding. a. What is the two-year forward price for a stock? b. What is the continuously compounded cost of carry for the stock? 3. A bank's assets and liabilities both have a duration of 5 years. Is the bank hedged against interest rate movements? Explain carefully any limitations of the hedging scheme it has chosen. 4. Explain what is meant by basis risk in the situation where a company knows it will be purchasing a certain asset in two months and uses a three-month futures contract to hedge its risk. 5. In December 2011, a company expects to buy 100,000 MMBtu of natural gas before the end of March 2012, but does not know exactly when. To hedge against volatile gas prices, it implements a rolling forward hedge by taking a long position on 10 two-month natural gas futures (only held for 1 month). One futures contract is for 10,000 MMBtu and is quoted in $ per MMBtu. The commodity is purchased in March 2012. What is total dollar gain/loss from the rolling hedge? Assume a hedge ratio of 0.8. Date Feb 2012 Futures Price Mar 2012 Futures Price Apr 2012 Futures Price Spot Price Dec 2011 Jan 2012 3.65 3.00 2.95 Feb 2012 2.70 Mar 2012 - 3.67 2.65 2.50 2.50