Question: Build an n = 10 period binomial model with short rate ri,j. r0,0 = 5%, u = 1.1, d = 0.9, q = 1-q =

Build an n = 10 period binomial model with short rate ri,j. r0,0 = 5%, u = 1.1, d = 0.9, q = 1-q = 1/2.

Compute the price of a zero-coupon bond (ZCB) that matures at timet = 10and that has face value 100. The correct answer for this question is 61.62.

My problem: Compute the price of a forward contract on the same ZCB of the previous question where the forward contract matures at time t = 4.

Thanks!

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