Question: Question 6 (20 points). Given that the following Zero rate with semiannual compounding: (a) What are the rates with continuous compounding? (8 points) (b) What

Question 6 (20 points). Given that the following Zero rate with

Question 6 (20 points). Given that the following Zero rate with semiannual compounding: (a) What are the rates with continuous compounding? (8 points) (b) What is the forward rate expressed with continuous compounding and semi-annual compounding for the 6month period beginning in 1.5 years? (4 points) (c) What is the value of an FRA that promises to pay 7% (compounded semi-annually) on a principal of $1 million for the 6-month started in 1.5 years? (8 points)

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