1. The one year zero rate is 5% and the three year zero rate is 5.5%. You are offered a 1 x 3 forward rate of 5.6%. How do you arbitrage it?
2. If you an invest an unknown sum of money at .75%, annual compound interest for 10 years, what is the 10 year growth factor for your investment? By what percentage will the value of your investment grow over 10 years
3. ABC has an unlevered cost of capital (Ra) of 12.4%, a cost of debt of 7.1%and a tax rate of 0%. What is the target debt-equity ratio if the targeted cost of equity (Rs) is 20.8%?