1. As a treasurer of the company, you wish to issue $40 million of 10-year bonds. You believe it will take three months before the issue can be floated and that interest rates will rise. You wish to lock in today's rates. Discuss how this can be done using futures contracts.
2. Here are data on five mutual funds:
|
Fund Return
|
Standard Deviation
|
Beta
|
|
A 14
|
6
|
1.5
|
|
B 12
|
4
|
0.5
|
|
C 16
|
8
|
1.0
|
|
D 10
|
6
|
0.5
|
|
E 20
|
10
|
2
|
What is the reward-to-variability ratio and the ranking if the risk-free rate is 3%?