Price of zero-coupon bond with maturity

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Assume you are treasury manager in a company and the company requires $1,000,000 [$1 Million) in 5 months for the clura'hon of 1 year. 'i'ou can finance this need by trading zero-coupon bonds, i.e., buying or selling zero-coupon bonds or go to bank to organize a forward contract. The bank quotes a forward rate 14% per annum semi-annual compounding applied from 5 months to 18 months. The prices of zero-coupon bonds with maturity 6 months and 12 months are listed in the above table and the price of zero-coupon bond with maturity 18 months is calculated in Part II. Ignoring all the other costs and given all the information above, are you going to acceptthe bank's offer?Just'ify your decision.

Reference no: EM133069566

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