Question
A customer would like to have a forward contract to borrow money three years from now for one year (the rate for t = 3
A customer would like to have a forward contract to borrow money three years from now for one year (the rate for t = 3 to t = 4). Calculate the rate that you would quote to the customer,f3,4, if the discount bond prices (par value=1) are as follows:
| t | 1 | 2 | 3 | 4 |
| Bt | 0.9542 | 0.8900 | 0.8278 | 0.7629 |
| A. 6.5% | |
| B. 6.7% | |
| C. 5.9% | |
| D. 7.0% |
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Entrepreneurial Finance Strategy, Valuation, And Deal Structure
Authors: Janet Smith, Richard Smith, Richard Bliss
1st Edition
0804770913, 9780804770910
