Question: not pay dividends over the next five years. You also collect information on five zero - coupon bonds: Bond A , B , C ,
not pay dividends over the next five years. You also collect information on five zerocoupon bonds:
Bond A B C D and E All bonds have a face value of $ The price and maturity of these five
bonds as of Jan. is summarized in Table below:
Table : Bond Prices on Jan.
An investor has just taken a long position in a year forward contract on the stock ie expiration
date is January
On January the stock price decreases to $ and the updated bond prices for each maturity
is summarized in Table below:
Table : Bond Prices on Jan.
b What is the price of Bond A on January
c What is the current forward price on the stock with the same expiration date of January
d What is the value today ie on January of the original long position in the forward
contract established on January
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