Question: CURRENT BOND PRICE = $1050, COUPON payments will be made $50 each in 6 months and 12 months. If risk free zero rates are 7%,

CURRENT BOND PRICE = $1050, COUPON payments will be made $50 each in 6 months and 12 months. If risk free zero rates are 7%, and 7.3%, for 6months and 12 months , respectively; and forward contract delivery period is 12 months.

1) Find the equilibrium forward price

2) What is the arbitrage strategy (in details like the ones done in the lecture video for full credit) if forward price = 1010

3) With the above arbitrage strategy, find the arbitrage profit that you'd earn.

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