1. TropiKana? Inc., a U.S? firm, has just borrowed euro? 1,000,000 to make improvements to an Italian fruit plantation and processing plant. If the interest rate is? 5.50% per year and the Euro appreciates against the dollar from ?$1.40/euro€ at the time the loan was made to ?$1.45/euro€ at the end of the first? year, how much interest will TropiKana pay at the end of the first year? (rounded)?
2. Supposed the 8 year spot rate is 8.5%and the 3 year spot rate is 4.5% . The forecasted 3 year rate three years from no way is 6.85%. What is the implied forward rate on 2- year bond originating 6 years from now ?