A forward contract to be matured in one year on a coupon-bearing bond is currently $950. A $50 coupon payment is expected after six and nine months. The continuous compounding risk-free interest rate is 6% per annum for all maturities. What is the equilibrium price of this one-year forward contract?

Answer rating: 100% (QA)

To determine the equilibrium price of the oneyear forward contract on a couponbearing bond we need t... View the full answer