Question

Please use the same binomial model as the previous question. Compute the price of a forward contract on the same ZCB of the previous question where the forward contract matures at time t = 4t=4. Submission Guideline: Give your answer rounded to 2 decimal places. For example, if you compute the answer to be 73.2367%, submit 73.24.

Answer 1

Answer:Assumed worth of ZCB(F) = 100

Development time (t) = 10

Let we accept expected financial specialist's necessary yearly yield rate (r) = 10 %

cost of a zero-coupon bond= P

P = F/[(1+r)^t]

henceforth

Step-by-step explanation: