1. These are the only options provided by the professor.
The quoted price for a September T- bond futures contract has a quoted price of 110'6. If annual interest rates go down by 1.5 percentage point, what is the gain or loss on the futures contract? Round to the nearest dollar.
($31,445)
-$13,509
$22,518
$38,357
None of the above
2. What is the maximum price per share Belmont Co. should pay for Cilla Co. based on the following data for Cilla: PV of future cash flows $900 million, 50 million outstanding shares, no debt, and discount rate of 10%. Cilla's current stock price is $20. What is the maximum price per share that Belmont should offer?
$16.36
$18.00
$40.91
$45.00
None of the above