solution for chapter 7

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1、SolutionforChapter7Problem1Solution:$1,500,000x(0.045+.0125)/2+$1,500,000x(0.05375+0.0125)/2=$43,125+$49,687.50=$92,812.50.Problem2Sincethesettlementrateislessthantheagreementrate,thebuyerpaystheseller(bank)theabsolutevalueoftheFRA.Theabsolutevalueo

2、ftheFRAis:$3,000,000x[︱0.04875-0.055︱x92/360]/[1+(0.04875x92/360)]=$3,000,000x[0.001597/(1.012458)]=$4,732.05Problem3Solution:Sincethesettlementrateisgreaterthantheagreementrate,theseller(bank)paysthebuyertheabsolutevalueoftheFRA.Theabsolutevalueof

3、theFRAis:$3,000,000x[︱0.06125-0.055︱x92/360]/[1+(.06125x92/360)]=$3,000,000x[.001597/(1.015653)]=$4,717.16.Problem4Solution:Sincetheagreementrateislessthanyourforecast,youshouldbuyaFRA.Ifyourforecastiscorrectyourexpectedprofitwillbe:$1,000,000x[(.

4、05125-.0475)x183/360]/[1+(.05125x183/360)]=$1,000,000x[.001906/(1.026052)]=$1,857.61Problem5