write my assignment 7674

1) Slowistan is a small island country whose currency is the US dollar. On Jan 1 2015 the price of astock S was quoted for sale on the Slowistan stock market at $50. Slowistan’s stock market settlementconvention is T + 2 months. Suppose interest rates are 10% per year, compounded annually.What would you pay for the stock if Slowistan suddenly changes its settlement convention to T+1month? Assume the year consists of 12 months each 30 days long.

2) Consider two of the conventions for quoting US interest rates:

(i) semi-annual compounding with 30/360 daycount (denoted Ysm for semi-bond since it’s used in the bond markets); and

(ii) annual compounding with act/360 daycount (denoted Yam for annual-money, since it’s used in the money markets).Derive an expression for in terms of . To make life simple, assume all years have 365days.

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