1. A firm has decided to borrow $500,000 on a 10% add-on basis, payable in 9 end-of-month installments. What would the nominal annual rate on the loan be?
a)17.65% b) 19.2% c) 20.5% d) 22.3%
2. Foghat Co. has 1,000,000 euros as receivables due in 30 days, and is certain that the euro will depreciate substantially over time. Assuming that the firm is correct, the ideal strategy is to?
a. sell euros forward.
b. purchase euro currency put options.
c. purchase euro currency call options.
d. purchase euros forward.
e. remain unhedged.