The current spot exchange rate is $1.25/€ and the three-month forward rate is $1.30/€. Consider a three-month European put option on €125,000 with a strike price of $1.20/€. If you pay an option premium of $5,000 to buy this put option, at what exchange rate will you break-even?

Questions 35-39 are based on the following information: In October 2013, there is a consensus in the capital market that the annual inflation rate is likely to be 3.5% in US and -1.5% in China for the next two years. Based on this information, answer the following questions regarding your prediction on foreign exchange rate. Chinese Yuan will be selling at a forward (premium/discount). The size of the forward premium/discount is %. Use approximate version of parity relationships. (2 points)

Con Hispaplan puedes:

Questions 40-42 are based on the following information: Suppose you observe the following exchange rates: S($/£) = 1.3. The one-year forward rate is F1($/£) = 1.32. The risk-free interest rate in the U.S. is 5% and in UK it is 2%. You can borrow either $1,300,000 or £1,000,000. Your total arbitrage profit will be $ (please leave whole dollars for your answer).

Questions 26-30 are based on the following information: Assume the current spot Euro is $1.1/€ and the six-month European put option has a striking price of $1.15/€. Assume the option premium is $0.02/€. If at the due date, the option is at the money, which of the following is not true?

Which phase of the cellular life cycle is the most radiosensitive?

Questions 35-39 are based on the following information: In October 2013, there is a consensus in the capital market that the annual inflation rate is likely to be 3.5% in US and -1.5% in China for the next two years. Based on this information, answer the following questions regarding your prediction on the foreign exchange rate. You would expect (US or China?) to have a higher interest rate according to parity relations. (2 points)

In which market does a clearinghouse serve as a third party to all transactions?

Questions 31-34 are based on the following information: A European call option is written on £62,500. The strike price is $1.40/£, and the option premium is $1,875. The option owner is holding a _______________ position.

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