1 today you are buying a one-year call on piper sons stock, Ask an Expert

Finance

1. Today, you are buying a one-year call on Piper Sons stock with a strike price of $27.50 per share and a one-year risk-free asset that pays 4 percent interest. The cost of the call is $1.06 per share and the amount invested in the risk-free asset is $26.44. What is the maximum potential loss per share on these investments at the end of one year?

$.10 loss

$.85 loss

$1.20 loss

$1.27 loss

2. The current exchange rate is USD/NZD/USD is 0.7001

The 90 day US T-Bill rate is 0.83% and the 2 yr. Treasury note rate is 1.24%

The New Zealand 90 day rate is 1.98% and the 2 yr. rate is 2.12%.

Using the International Fisher Effect forecast the CHF/US exchange rate:

a. 3 months from now; and

b. 2 years from now.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92725187

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