QF5202A Structured Products Homework Two 1.& & & (A)& Why& The& Randomness& In& Interest& Rate& Plays& A& Secondary& Role& In& Convertible& Bond& Price& When& Compared& With& Their& Non-Convertible& Counterpart? & Do& Convertible& Bond& Investors

Qf5202astructured Productshomework One1. The Optimal Policy Adopted By The Holder Of A Flexible Notional Currency Forward Is To Exercise Either (I) The Whole Notional, (Ii) Zero Amount On Each Preset Exercise Date. Use Your Own Words To Justify The Above Claim. Suppose Differential Transaction Costs