1. An investor enters into a short forward contract on 120 thousand GBP for 1.52 USD each. How much does the investor profit if the exchange rate at the end of the contract is 1.54 USD/GBP?
Note: GBP is British pounds, USD is US dollar.
2. Slim Waist Inc. announced today that they will begin paying annual dividends. The first dividend will be paid one year from today in the amount of $.35 a share. The following dividends will be $.40, $.55, and $.70 a share annually for the following three years, respectively. After that, dividends are projected to increase by 2.5 percent per year. How much are you willing to pay to buy one share of this stock if your desired rate of return is 12 percent? (PLEASE POST EXPLANATION)
A) $6.27
B) $5.82
C) $8.83
D) $10.67