In the London market, EEC Inc.s stock closed at 0.875 per share on Thursday, April 1, 2005. EEC trades in ADRs in the over-the-counter market in the United States. Four underlying EEC shares are packaged into one ADR. On April 10, 2005, the spot exchange rate for the British pound sterling to the U.S. dollar was 0.7366 to $1.00. Determine the no-arbitrage U.S. price of 1 ADR.

Mike Jones is also interested in a 10-year floating-rate note (FRN) with coupons referenced to a 6-month London Interbank Offered Rate (LIBOR). The note pays interest on a semiannual basis. Assume that the current 6-month LIBOR is 3%. If the risk premium above LIBOR that the issuer must pay is 1/4 percent, calculate the next periods coupon rate on a 1,000 face-value FRN.