An Investor enters into a forward contract to sell a bond on 3 months' time at $120 after 1 month, the bond price is $121.50 suppose that the term structure of R is flat at 5% for all maturities. If the bond is paying a coupon of $6 in one month time after calculating the arbitrage free price, what is the net value of the investors short position assuming that the coupons are due on the bond over the next 2 months? Answers An Investor enters into a forward contract to sell a bond on 3 months' time at $120 after 1 month, the bond price is $121.50 suppose that the term structure of R is flat at 5% for all maturities. If the bond is paying a coupon of $6 in one month time after calculating the arbitrage free price, what is the net value of the investors short position assuming that the coupons are due on the bond over the next 2 months? Answers