1. Which of the following forms of trading blocs allow for unrestricted trade of goods and services among its members?

I. Free trade areas
II. Customs unions
III. Common market

2. A portfolio manager has a tight tracking error of 50 basis points. The manager expects to be within this tracking error for a given quarter 85% of the time.

If that expectation is correct and each quarter is independent, the probability that the manager is within the tracking error for at least 7 of the next 8 quarters is closest to:

3. You are provided with the following information on a non-callable, non-convertible preferred stock:

Face value: USD50
Annual dividend: USD2.50
Maturity: Perpetual
Embedded options: None
Required rate of return: 6.25%

The intrinsic value of this stock is closest to:

4. A company had equipment worth USD50 million on 1 January. During the year, they purchased equipment for USD10 million. On 31 December, the equipment account showed USD40 million. All figures are shown at cost, before depreciation.

The amount of equipment sold during the end of the year, at cost, would be closest to:

5. Haspiess Systems, Inc. and Signicomp Manufacturing enter into a netted interest rate swap, with a notional USD75M. Haspiess will pay a fixed 5%, and Signicomp will pay LIBOR + 75bp. LIBOR is 3.5%.

The first semiannual payment will be closest to: