Question: Only the answer for part d) is required The 6-month, 12-month. 18-month, and 24-month zero rates are 4%, 4.5%, 4.75%, and 5% with semiannual compounding.

Only the answer for part d) is required

  1. The 6-month, 12-month. 18-month, and 24-month zero rates are 4%, 4.5%, 4.75%, and 5% with semiannual compounding.
  1. What are the rates with continuous compounding?
  2. What is the forward rate for the six-month period beginning in 18 months
  3. What is the value of an FRA that promises to pay you 6% (compounded semiannually) on a principal of $1 million for the six-month period starting in 18 months?
  4. Suppose 18 months later, the six-month LIBOR rate becomes 6.5% with semiannual compounding, how much will you pay or receive when you settle the FRA?

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