Suppose that oil forward prices for 1 year, 2 years, and 3 years are $20, $21, and
Question:
a. What is the 3-year swap price?
b. What is the price of a 2-year swap beginning in one year? (That is, the first swap settlement will be in 2 years and the second in 3 years.)
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a We first solve for the present value of the cost per three barrels b...View the full answer
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