English Language and Literature homework help
Question 1 An Australian investor holds a one month short forward position on USD. The contract calls for the investor to sell USD 2 million in one months at a delivery price of $1.61 per USD. The current forward price for delivery in one month is F= $1.5850 per USD. Suppose the one month rate of interest is 6%. What is the value of the investors position?Question 2A speculator can choose between buying 100 shares of a stock for $40 per share and buying 1000 European call options on the stock with a strike price of $45 for $4 per option. For second alternative to give a better outcome at the option maturity, the stock price must be above 50 or below 50 explain?Question 3Explain in detail the difference between the following terms:(a) Payoff to a FRA.(b) Price of a FRA.(c) Value of a FRA.1)This means that the investor can buy @ $1.5850 and sell @ $1.61.The interest rate is 6%. So, he will have to incur charges @ (1.5850×6%x1/12)=1.5850/200=.007925Expense=1.5850+.007925=1.592925…