1. Assume the spot price of the British pound is currently $1.50. If the risk-free interest rate on 1-year government bonds is 1% in the United States and 2% in the United Kingdom, what must be the forward price of the pound for delivery one year from now?

2. A bond is currently selling at 1.15 on its par value of $1,000. This bond has a maturity of 15 years and a coupon rate of 5%, payable semi-annually. If the inflation rate is 3%, what is the real yield on this bond?

3. A stock with a beta of 2.1 has an expected rate of return of 32%. If the market return this year turns out to be 13 percentage points below expectations, what is your best guess as to the rate of return on the stock?

Stock Return %: ____________

(Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.)