How might expectations of higher oil prices

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1. The Korean Treasury has just issued a 20-year zero coupon bond. The yield on such bonds is currently 6%. What is the price of the bond today per $1,000 of face value? Please show your analysis.

2. How might expectations of higher oil prices affect the demand for loanable funds, and interest rates in the United States? Will the interest rates of other countries be affected in the same way? Explain.

3. The forward price of wheat for delivery in three months is $3.90 per bushel, while the spot price is $3.60. The three-month interest rate in continuously compounded terms is 8% per annum. Is there an arbitrage opportunity in this market if wheat may be stored costlessly?"

Reference no: EM131983864

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