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What is the forward price of contract

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This morning you agreed to buy a one-year Treasury bond in six months. The bond has a face value of $1,000. Use the spot interest rates listed here to answer the following questions.

Time Equivalent Annual Rate
6 months 3.61%
12 moths 4.05%
18 months 4.73%
24 months 5.42%

a. What is the forward price of this contract?

b. Suppose shortly after you purchased the forward contract all rates increased by 30 basis points (a basis point is 1/100 of a percent). For
example, the six-month rate increased from 3.61 percent to 3.91 percent. What is the price of a forward contract otherwise identical to yours given these changes?

Reference no: EM133058114

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