1. Assume the time from acceptance to maturity on a $5,000,000 banker's acceptance is 120 days. Further assume that the importing bank's acceptance commission is 1.5 percent per annum and that the market rate for 90-day B/As is 6.0 percent. What is the amount the exporter will receive if he holds it to maturity?
A) $5,350,000
B) $3,875,000
C) $4,975,000
D) $5,025,000
2. What derivative position are you exposed to if you have the right to sell the underlying asset at maturity for a certain fixed price if you want?
a) Long a future
b) Short a future
c) Long a put
d) Short a put
e) Short a call
3. Joe just signed a lease for three year terms to open up a Store in a Shopping Mall. The lease is for a Space of 400 sq ft @ 10 per sq ft per month. Under the lease the terms of the lease Rent per sq ft would go up every yr by 5%. At a discount rate of 8%, the Current Value of this lease is:
a. $ 12,610
b. $ 10,805
c. $ 10,308
d. $ 12,000