1. You observe that the spot price of the Swiss franc (CHF) is 1.1 USD/CHF, and that the 1 year forward rate is 1.08 USD/CHF. What is the percent forward premium? Enter answer as percent, accurate to 2 decimal places
2. When questioned, managers argue that “Financial Flexibility” is one of the main issues affecting their choices about capital structure. What are the benefits of maintaining such financial flexibility? What are the possible downsides (think about the theories of capital structure that we have discussed)?