1.If the initial margin is 11,000, the maintenance margin is $5,500 and your balance is $3,000, how much must you deposit? (Points : 3.84)

a.$2,500 b.$1,500 c.$8,000 d.8,500 e.5,500

2.

You are trying to see if there is an arbitrage opportunity. Current US interest rate is 4%. The spot rate for US/EUR is2.5 while the forward rate for a year is 2. If the current interest rate in Germany is 30%. What should be done?(Points : 3.84)

a.Borrow in US and convert money to Euros, invest in Germany and after a year convert back to US dollars. b.Borrow in Germany and convert to US dollars at spot rate, invest in US and after a year convert back to Euros at forward rate c.BorrowEuros in Germany and invest in Germany, wait for a year and then convert to dollars using the forward rate. d.Borrow dollars in US, invest in US, wait for a year and convert to Euros at Forward rate and invest in Germany e.There is no arbitrage with these numbers, so you must invest in your native nation

3.

Determine the annualized implied repo rate on a Treasury bond spread in which the March is bought at60 and the June is sold at 61.5.The March CF is 1.1 and the June CF is 1.14.The accrued interest as of March 1 is1.15 and the accrued interest as of June 1 is 1.3. (due to calculator precision, pick the closest answer)(Points : 3.84)

a.21% b.23% c.28% d.35% e.31%

4.

A call option priced at $2 with a current stock price of $30 in the marketand an exercise price of $35 would be worth (you don't own the stock)? (Points : 3.84)

a.$2 b.$32 c.$3 d.-$2 e.$35

5.

You are the purchaser of a put option where the premium is $6 and exercise price is $52. You bought this option when the stock price was $50. If the stock price is $54 right now (and you're at expiration), what is your net cash flow from this investment? (Points : 3.84)

a.negative $4 b.negative $6 c.$4 d.negative $2 e.$2