1. How do you create a risk free position of spot assets and call options?
2. You found an investment that offers 12% return, compounded quarterly, that you plan to invest for 5 years. What is the effective interest rate on this investment?
3. On the day you entered college, you borrowed $25,000 on an interest-only, four-year loan at 4.75 percent from your local bank. Payments are to be paid annually. What is the amount of your loan payment in Year 2?