What is the cash flow

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This information on the yield curve applies to all questions below: interest rates for different maturities (1yr, 2, 3, 4, 5) are (1.0%, 2.8, 4.5, 4.7, 4.0) respectively.

a. Four years from today you will deposit money for one year. You need to have $100,000 at t=5. If you hedge all risk, how much do you need to deposit at t=4?

b. What is the cash flow at t=5 associated with your initial deposit (the amount you will withdraw from the bank...it does not include the FRA)?

c. What is the cash flow at t=5 associated with the FRA?

Reference no: EM133120363

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