1. You have just landed a job with a prestigious venture capital firm and will be making a great salary in the Spring. Your recent ambition to own a nice Rolex Watch will now be possible. You find that the watch is currently priced at $50,000 for a limited time and you wont have access to your huge $100,000 signing bonus until 4 months from now. Although you do not have the cash to buy the watch, the dealer doesnt want to lose a sure sale. He is therefore willing to quote you a guaranteed price for the watch 4 months from now if agree to purchase the watch today. The reason he is willing to do that is because he can book the sale for accounting purposes today as long as the deal is signed and both parties are obligated to the transaction.
2. 1. a. If the dealer quotes you a price of $54,000 (and is willing to buy or sell forward at this price), is there an opportunity to make a zero investment profit and if so how would you specifically do so and how much would the profit would you make? Assume that you could borrow or lend from a bank at the 12% mentioned in part a) above.
   3. b. If the appropriate borrowing rate for a Rolex loan is 12%, what price does he quote today to transact 4 months from now? Assume that any borrowing or investing associated with the Rolex transaction must be related to the 12% loan rather than at the risk-free rate. Also assume that the dealers spot and forward prices are good for buying or selling at those prices.