The following table contains the possible actions and payoffs of players 1 and 2.     Player 2       Cooperate Not Cooperate Player Cooperate 15 , 15 -20 , 20 1 Not Cooperate 20 , -10 10 , 10     This game is infinitely repeated, and in each period both players must choose their actions simultaneously. If both players follow a tit-for-tat strategy, then they can Cooperate in equilibrium if the interest rate r is . At an interest rate of r=0.5, . If instead of playing an infinite number of times, the players play the game only 10 times, then in the first period player 1 receives a payoff of

Company A can borrow money at a fixed rate of 9 percent or a variable rate set at prime plus 1 percent. Company B can borrow money at a variable rate of prime plus 2 percent or a fixed rate of 8.25 percent. Company A prefers a fixed rate and company B prefers a variable rate. A swap dealer can bring them together for a commission of 1% on the swap deal. a) Compute the potential gain for the concerned parties through the swap deal? b) Show a swapping arrangement, ensuring that both Company A and B are better off and the swap dealer gets the 1% cut.

Hi, How do i solve this problem using a formula or financial calculator? Two securities, A and B, are available for trading. Prices (at t=0) and future payoffs (at t=1) in bothstates are given in the following table. Assume that both states are equally likely (50% chance of each). There is another security, call it C, whose payoff at t=1 is equal to $300 in the weak state and$600 in the strong state. Find the no-arbitrage price (at t=0) of security C What is the risk-free rate of return in this economy?

Please do not copy and paste what has already been posted and all working. Company A can borrow money at a fixed rate of 9 percent or a variable rate set at prime plus 1 percent. Company B can borrow money at a variable rate of prime plus 2 percent or a fixed rate of 8.25 percent. Company A prefers a fixed rate and company B prefers a variable rate. A swap dealer can bring them together for a commission of 1% on the swap deal. a) Compute the potential gain for the concerned parties through the swap deal?

A) Assume you are an exporter and you want to sell USD that you have received as export remittance. The bank quotes a price of 65.10 / 65.12 for USDINR. At what price can you sell one unit of USD? and Why?B) Sultan sells a USD call option at strike of 65.8 and receives a premium of INR 0.3. What would be the breakeven point for the transaction?C) Assume that price of a USDINR call option is quoted as INR 0.25 / 0.27 (bid price / ask price). Given this quote, at what price could a company buy the call option? and Why?

Please do not copy and paste what has been already posted. Show full working. Company A can borrow money at a fixed rate of 9 percent or a variable rateset at prime plus 1 percent. Company B can borrow money at a variable rateof prime plus 2 percent or a fixed rate of 8.25 percent. Company A prefersa fixed rate and company B prefers a variable rate. A swap dealer can bringthem together for a commission of 1% on the swap deal.a) Compute the potential gain for the concerned parties through the swapdeal?b) Show a swapping arrangement, ensuring that both Company A and B arebetter off and the swap dealer gets the 1% cut.

There are three currencies: alpha (a), beta (b) and gamma (c). The three exchangerates are as follows: 1 alpha buys you 5 betas; 1 beta buys you one half of onegamma; 1 gamma buys you one third of one alpha. That is,Xb/a = 5, Xc/b =1/2, Xa/c =1/3.There is no bid-ask spread, so that Xa/b = 1/Xb/a etc. There are six specialisttraders, AB, BA, BC. CB, CA and AC who trade the six possible pairs of currencies:trader AB lives in Alpha-land and wants to sell alphas for betas; trader BA livesin Beta-land and wants to sell betas for alphas; and so on. All of these traders arewilling to trade at the current market exchange rates, as quoted above. In the absence of arbitrage opportunities, what will be the relationship betweenthe three exchange rates Xb/a, Xc/b and Xa/c. Compare the relative importanceof least cost dealing and arbitrage in determining the relative equilibriumexchange rates.

There are three currencies: alpha (a), beta (b) and gamma (c). The three exchangerates are as follows: 1 alpha buys you 5 betas; 1 beta buys you one half of onegamma; 1 gamma buys you one third of one alpha. That is,Xb/a = 5, Xc/b = 1/2 , Xa/c = 1/3.There is no bid-ask spread, so that Xa/b = 1/Xb/a etc. There are six specialisttraders, AB, BA, BC. CB, CA and AC who trade the six possible pairs of currencies:trader AB lives in Alpha-land and wants to sell alphas for betas; trader BA livesin Beta-land and wants to sell betas for alphas; and so on. All of these traders arewilling to trade at the current market exchange rates, as quoted above. Suppose you are an arbitrage trader located in Alpha-land. Is there an arbitrageopportunity? What strategy would you adopt to exploit it and with whom doyou trade?

There are three currencies: alpha (a), beta (b) and gamma (c). The three exchangerates are as follows: 1 alpha buys you 5 betas; 1 beta buys you one half of onegamma; 1 gamma buys you one third of one alpha. That is,Xb/a = 5, Xc/b = 1/2 , Xa/c = 1/3.There is no bid-ask spread, so that Xa/b = 1/Xb/a etc. There are six specialisttraders, AB, BA, BC. CB, CA and AC who trade the six possible pairs of currencies:trader AB lives in Alpha-land and wants to sell alphas for betas; trader BA livesin Beta-land and wants to sell betas for alphas; and so on. All of these traders arewilling to trade at the current market exchange rates, as quoted above. What is the cost of one beta in terms of alpha when trading indirectly usingthe currency gamma? When buying betas with alphas, is the direct route orthe indirect route the method of least cost dealing?

A firm can issue one of the listed products and convert them into the floating rate using IR swaps (LIBOR for 3.7% fixed). What is the lowest floating rate that the firm can get?   Fixed rate note: 4%   Simple FRN: L + 0.5%   Inverse floater: 7.6% - L   (e.g., if we can pay only L + 0.1% that would be great, but can we obtain such a low rate?)   a.) L + 0.1%   b.) L + 0.2%   c.) L + 0.3%   d.) L + 0.5%