1) Please explain the impact of a change in the savings rate on the output.

2) 2. Suppose the interest rate is r=.06 per year compounded continuously and the current value of an asset, S, is $100.

a).What is the lower bound for C110 with expiration date 1 year from now.

b). Suppose C110 costs $3 with expiration date1year from now. How much is P110?

c). Suppose C90−P90 = $15 with expiration date. 5year from now. What strategy should you adopt? How much money can you make?

pur-new-sol