1. The spot exchange rate in dollars per euro is $1.31. Dollar denominated interest rates are 4.0% and euro denominated interest rates are 3.0%. What is the difference in call and put option prices given a 2-year option and a $1.34 strike price?
A) -$0.1041
B) -$0.0652
C) $0.1233
D) $0.1546
2. Projects A and B are mutually exclusive. Each has a positive net present value and each has calculated payback period that is less time the required payback periods. Since they are mutually exclusive, whiich project(s), if either, should the firm accept?
Both A and B
Neither A nor B
A, but not B
B, but not A
Either A or B but not both A and B