Question: A certain 10-year bond is currently celling for $920. A friend of yours owns a forward contract on this bond that has delivery date in

A certain 10-year bond is currently celling for $920. A friend

A certain 10-year bond is currently celling for $920. A friend of yours owns a forward contract on this bond that has delivery date in 1 year and a delivery price of $940. The bond pays coupons of $80 every 6 months, with one due 6 months from now and another just before maturity of the forward. The current interest rates for 6 months and 1 year (compounded semiannually) are 7% and 8%, respectively (annual rates compounded every 6 months). What is the current value of the forward contract

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