Current assets = $70 and Current liabiliTes = $45.

a.

Use the above informaTon to describe net working capital.

b.

Explain the difference between permanent and temporary working capital

c.

Describe 2 ways permanent net working capital can be finance.

5.

What are the differences between a novated forward agreement and a basic forward

agreement?

( do not give me the characteristic of each and leave me to figure out the

differences)

6.

You buy a call option with strike price $21 and pay the write $1.20. At settlement the stock price

is $23.

a.

Is the call opTon in the money? How do you know?

b.

Have you earned a profit? Explain.

c.

Did the writer make any money? Explain.

7.

A recent news arTcle said " the forward price in current contracts on FaceBook stock is less than

the current market price. So we expect the stock price of FaceBook will fall."

a.

Is this statement true?

b.

If not why not?

c.

How can the forward price be above or below the current market price?