Description Instructions 1. Please DO NOT Include "USD" or "$" in you final answer. For instance, if you get the payoff of 100 US Dollars, just put 100 in your final answer 2. Round your final answers to TWO decimal points. 3. For all the intermediate steps, please round to at least SIX decimal points. Otherwise, if you do not round to SIX decimal points, the rounding errors might hurt your final answer. 4. For all the questions regarding Payoff or Profit/Loss, if you find out a positive value, then you just use the number as the answer of the question. If you find out a negative value, then you should put "-" when you put down your answer. For instance, if you get the payoff of 100 US Dollars, just put 100 in your final answer; if you get the payoff of -100 US Dollars, just put -100 in your final answer 5. In all the numerical questions, if your answer is USD 1,000,000, please put 1000000 as your answer. Please do NOT use "1 million". Please do NOT use "1,000,000" neither. Those two types of answers will NOT be awarded with credits! (Choose ALL the correct answer(s) that apply)QUESTION 1 12.5 points Save Answer Suppose that a party wanted to enter into an FRAthat expires in 42 days and is based on 137-day LIBOR' The dealer quotes a rate of 4,75% on this FRA. Assume that at expiration, the 137-day LIBOR is 4% and the notional principal is $40,000,000. Calculate the FRA payoff on a short position t QUESTION 2 12.5 points Save Answer Suppose you enter into a short 6-month forward position at a forward price of $100. What is the payoff in 6 month for the underlying prices of $150 QUESTION 3 12.5 points Save Answer Assume ABC expects to receive 20,000,000 in 90 days. A dealer provides a quote of $0.875/ for a currency forward contract to expire in 90 days. Suppose that at the end of 90 days, the underlying currency's exchange rate is $0.90/. Assume that settlement is in cash. lsABC's payoff in USD or EURO? 0 EURO 0 USD QUESTION 4 12.5 points Save Answer Assume ABC expects to receive 20,000,000 in 90 days. Adealer provides a quote of $0.875/ for a currency forward contract to expire in 90 days, Suppose that at the end of 90 days, the underlying currency's exchange rate is $0.90/. Assume that settlement is in cash. At expiration, what is ABC's payoff? [Hint: is this a Long, or a Short? Think about the actions by the long vs short in the context of foreign currencies. The long pays... gets...; the short pays... gets....] QUESTION 5 12.5 points Save Answer Suppose you enter into a long 6-month forward position at a fonNard price of $50. What is the payoff in 6 month for the underlying prices of $150 QUESTION 6 12.5 points Save Answer The treasurer of CompanyAexpects to borrow $15,000,000 in 90 days from now. The treasurer expects short-term interest rates to rise during the next 90 days. In order to hedge against this risk, the treasurer decides to use a FRA that expires in 90 days and is based on 90-day LIBOR. The FRA is quoted at 4%. At expiration, LIBOR is 4.5%. Assume that the notational principal on the contract is $15,000,00. Calculate the payoff of entering the FRA. (Hint: you need to firstly gure out whether CompanyA is interested in Long or Short) QUESTION 7 12.5 points Save Answer Suppose you enter into a long 6month fonivard position at a forward price of $50. What is the payoff in 6 month for the underlying prices of $50 QUESTION 8 12.5 points Save Answer Suppose you enter into a short 6-month forward position at a fonlvard price of $100, What is the payoff in 6 month for the underlying prices of $50