Question: Suppose that a commoditys respective forward prices for 1 year and 2 years are $130 and $140. The 1-year effective annual interest rate is 6.3%,

Suppose that a commoditys respective forward prices for 1 year and 2 years are $130 and $140. The 1-year effective annual interest rate is 6.3%, and the 2-year interest rate is 5.7%. You will pay a fixed rate of $134.87559 in a 2-year swap and receive the floating rate. At the time you enter the swap contract, its value to you is..

.Answers: a. $0.0280 b. $0.0280 c. $0.0000 d. $0.0323 e. $0.0323

Please show proper formulas and explanations. Thank you!

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