Question: Suppose that a commodity's forward prices for 1 year and 2 years are $71 and $76. The 1 -year effective annual interest rate is 5.4%,

Suppose that a commodity's forward prices for 1 year and 2 years are $71 and $76. The 1 -year effective annual interest rate is 5.4%, and the 2 -year interest rate is 4.9%. You will pay a fixed rate of $73.44616 in a 2 -year swap and receive the floating rate. Now suppose that just after you enter into the contract, the 1-year and 2 -year interest rates each fall by 75 basis points. What is the value of your swap position after this change? Selected Answer: a c 50.0078 Answers: a. 50.0078 b. $0.0169 c. $0.0078 d. $0.0000 e. 50.0169

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