Exhibit 11.1 Assume the Following

question 39

Multiple Choice

Exhibit 11.1 Assume the following:
(1) the interest rate on 6-month treasury bills is 8 percent per annum in the United Kingdom and 4 percent per annum in the United States;
(2) today's spot price of the pound is $1.50 while the 6-month forward price of the pound is $1.485.
-Assume that you are the Chase Manhattan Bank of the United States,and you have 1 million Swiss francs in your vault that you will need to use in 30 days.Moreover,you need 500,000 British pounds for the next 30 days.You arrange to loan your francs to Barclays Bank of London for 30 days in exchange for 500,000 pounds today,and reverse the transaction at the end of 30 days.You have just arranged a:

• A) Forward contract
• B) Futures contract
• C) Spot contract
• D) Currency swap

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Definitions:

Partial Reinforcement

A conditioning schedule in which a reward is not administered every time the desired response is performed, leading to more resistant learned behavior.

Primary Reinforcement

A stimulus that satisfies basic survival needs and is inherently rewarding, such as food, water, or warmth, used in behavioral conditioning.

Negative Reinforcer

A stimulus whose removal or avoidance following a behavior increases the likelihood of that behavior occurring again in the future.

Conditioned Stimulus

A formerly neutral signal that, once it is linked with an unconditioned stimulus, ultimately evokes a conditioned response.