You enter into a forward contract to buy a 10-year, zero coupon bond that will be...
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You enter into a forward contract to buy a 10-year, zero coupon bond that will be issued in one year. The face value of the bond is $1,000 and the 1-year and 11-year spot interest rates are 5.1 percent and 7.1 percent, respectively. a. What is the forward price of your contract? (Do not round Intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. Suppose both the 1-year and 11-year spot rates unexpectedly shift downward by 1 percent. What is the new price of the forward contract? (Do not round Intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) a. Forward price b. New forward price You enter into a forward contract to buy a 10-year, zero coupon bond that will be issued in one year. The face value of the bond is $1,000 and the 1-year and 11-year spot interest rates are 5.1 percent and 7.1 percent, respectively. a. What is the forward price of your contract? (Do not round Intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. Suppose both the 1-year and 11-year spot rates unexpectedly shift downward by 1 percent. What is the new price of the forward contract? (Do not round Intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) a. Forward price b. New forward price
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