This is all the information provided. There are multiple questions, but they are very short, so please answers all. Thank you

Question 1

A bond is currently quoted at 99:12 and it makes coupon payments semi-annually. The next coupon payment is due in 90 days. The coupon rate is 4% per annum, the par value is 1,000 and there are 180 days in one semi-annual period. Calculate the full price that an investor will need to pay the holder for the bond. (3 marks)

Question 2

In February 2015, it was widely reported that interest rates on debt in some European countries had become negative. The same phenomenon was observed in the US markets in December 2008. What does this mean, and how did it happen? (4 marks)

Question 3

Assume we are in January right now. The current risk-free interest rate is 3%. We observe today that the June six months futures price for gold is 1,200 while the one-year December futures price for gold is 1,220. Is there an arbitrage opportunity? Demonstrate how we can exploit this arbitrage opportunity. (3 marks)

Question 4

A European put that expires in six months with a strike price of 18 is selling at 2. The underlying stock is priced at 19, and does not pay any dividends. The term structure is flat and all risk free interest rates are 2% p.a.

a) What should be the price of a European call option that expires in 6 months with a strike price of 20? Demonstrate the methodology used. (4 marks)

b) If the actual European call is trading at 2.20, demonstrate how you can perform arbitrage to make a profit. (6 marks)

Question 5

A bond that pays a yearly coupon of 25 and has face value of 1,000 will mature in a year. If that bond is currently quoted at 99:5/32 obtain the YTM of the bond, rounding your answer to the nearest basis point. (5 marks)

Question 6

A bond is currently quoted at 98:16 and makes coupon payments semi annually. Its next coupon payment is due in 45 days. The coupon rate is 2% per annum, the par value is 1,000 and there are 180 days in one semi-annual period. Calculate the price at which the holder of the bond will sell this bond. (5 marks)