A Treasury bond has a face value of $$12,000,$ a coupon of $4\%,$ and several years to maturity. Currently this bond sells for $$9,660,$ and the previous coupon has just been paid. What is the forward price for delivery of this bond in $1$ year? Assume that the interest rates for $1$ year out are flat at $9\%$ semiannually compounded. The T Bond pays coupons semi$-$annually. If the forward is trading in the market for $$9,400$ what will you do$?$ If an at$-$the$-$money one$-$year call option on the forward is available how much should it sell for? If this is the only available option, can you use it to create a floor for the one$-$year forward price?

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