Q1.Assume that there is a forward market for acommodity. The forward price of the commodityis $50. The contract expires in one year. The risk-free rate is 10 percent. Now, six months later, thespot price is $60. What is the forward contract worth(Value) at this time?

Q2. Consider a $40 million notional principalinterest rate swap with a fixed rate of 7.5 percent,paid quarterly on the basis of 90 days in thequarter and 360 days in the year. The firstfloating payment(LIBOR rate) is set at 7.9percent. Calculate the first net payment and identify which party, the party paying fixed or the party paying floating, pays.