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1.Sarah Wiggum would like to make a single investment and have $1.9 million at the time of her retirement in 28 years. She has found a mutual fund that will earn 5 percent annually. How much will Sarah have to invest today? If Sarah earned an annual return of 15 percent, how soon could she then retire? a. If Sarah can earn 5 percent annually for the next 28 years, the amount of money she will have to invest today is $ (Round to the nearest cent.)

2.A 1 year call option with a strike price of $7 is selling for $1.75. The stock price is currently $6.

a. What is the price of the corresponding put having the same expiry and exercise price? The present value of the exercise price is $4.

b. The put is currently selling at $0.30. Is the put over- or under-priced?

c. What steps would you take to make an arbitrage profit? (Don't need calculations for part C - just explain please!)

3. How many years will it take for $520 to grow to $1,036.54 if it's invested at 8 percent compounded annually? The number of years it will take for $520 to grow to $1,036.54 at 8 percent compounded annually is years (Round to one decimal place)