**1.**The six month LIBOR is **15%**per annum with continuous compounding for all maturities. Under the terms of an interest rate swap, SABIC Financial has agreed to pay **8%**per annum and to receive six-month LIBOR in return on a notional principal of **$150**Million with payments being exchanged every six months. The swap has a remaining life of fifteen months. The six-month LIBOR at the last payment date was **6%**per annum.

A) When was the last (i.e., most recent) payment made?

B) What are the remaining payment dates?

C) What is the value of the fixed-rate bond?

D) What is the value of the floating-rate bond?

E) What is the value of the swap to SABIC Financial?

2.Put options on a stock currently trading at $35 a share with strike prices $30 and $40 cost $4 and $6, respectively. **Create**(i) a **bullish spread**and (ii) a **bearish spread **from these puts and construct a table that shows the profit (loss) for each strategy for change in stock price. Possible stock prices at expiration are 20, 30 40, 50 and 75.

**Construct a table that shows the profit and payoff forboth spreads.**

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