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1. If 3-month LIBOR is 2.65% per annum what is the Eurodollar futures price
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A. 97.09
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B. 96.17
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C. 97.35
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D. 89.40
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2. In a Forward Rate Agreement, if LIBOR rate increases significantly, the borrowing firm’s net cost to borrow will:
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A. Increase by the present value of the spread between the fixed and floating rate interest for the swap contract
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B. increase by the amount that the LIBOR rate has increased.
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C. Stay the same as it was today.
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D. Decrease, as the futures price decreases.
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3. A Yen futures is priced at $0.0092, or 1 Yen = 0.0092 USD. What is the price quote in Yen
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A. 121.23
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B. 108.69
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C. $.092
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D. 136.48
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4. In a(n) ___we discount the floating rate payments to the present value to compare floating to fixed payments.
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A. FRA
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B. ED Futures
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C. Swap
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D. Stock Option
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5. From an employee / investor's perspective, which stock option exercise strategy will most likely incur the least amount of income tax?
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A. Exercise each vesting period's full amount then sell all shares at their 52 week high share price.
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B. Exercise in full each vesting period, selling only enough stock to cover your cost each each vesting period, then sell all shares at the end of the grant period.
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C. Exercise and sell all shares at the time they are in the money.
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D. Exercise each vesting period's full amount and then sell all shares at the end of the grant period.
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6. A 15 year, $1,000 par value corporate bond, pays a semi-annual coupon at a 5% annual rate. How much total income will you receive if you hold the bond from issue through full maturity?
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A. $50
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B. $7,500
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C. the answer is not here
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D. $750
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7. If interest rates declined this year, what will happen to our existing corporate bond, purchased last year, when we try to sell it?
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A. It will sell for a price greater than what we purchased it for
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B. It will sell for a price less than what we purchased it for
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C. It will be illiquid; we won't be able to sell it until interest rates decline again
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D. It will sell for roughly the same price that we paid for it
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