Question: Suppose that the continuous forward rate isr(t) = 0.033 + 0.0012t. What is the current value of a par $100 zero-coupon bond with a maturity

  1. Suppose that the continuous forward rate isr(t) = 0.033 + 0.0012t. What is the current value of a par $100 zero-coupon bond with a maturity of 15 years?
  2. Suppose the continuous forward rate isr(t) = 0.04 + 0.001twhen a 8-year zero coupon bond is purchased. Six months later the forward rate isr(t) = 0.03 + 0.0013tand bond is sold. What is the return?

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