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Assume you wish to take a long position in a forward contract with a 2 year maturity. However, this forward contract is not for delivery

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Assume you wish to take a long position in a forward contract with a 2 year maturity. However, this forward contract is not for delivery of a zero-coupon bond on the maturity of the forward contract. On the maturity of the forward contract, this forward contract delivers a four-year coupon bond with annual coupon payments of $45.00 and a face value of $1000.00 The current annualized forward rates with continuous compounding are the follow- ing: Fo(0, 1) = 1% F. (1,2) = 2.5% F. (2,3) = 4% F. (3, 4) = 5.5% F. (4,5) = 6.5% F. (5,6) = 6% (a) Based on the above forward rates, determine the appropriate price that the long position should pay for this four-year coupon bearing bond. As in all forward contracts, the delivery price will not be paid by the long party until the maturity date of the forward contract - when the security is delivered. In this question, the maturity date the forward contract is in 2 years from now. Assume you wish to take a long position in a forward contract with a 2 year maturity. However, this forward contract is not for delivery of a zero-coupon bond on the maturity of the forward contract. On the maturity of the forward contract, this forward contract delivers a four-year coupon bond with annual coupon payments of $45.00 and a face value of $1000.00 The current annualized forward rates with continuous compounding are the follow- ing: Fo(0, 1) = 1% F. (1,2) = 2.5% F. (2,3) = 4% F. (3, 4) = 5.5% F. (4,5) = 6.5% F. (5,6) = 6% (a) Based on the above forward rates, determine the appropriate price that the long position should pay for this four-year coupon bearing bond. As in all forward contracts, the delivery price will not be paid by the long party until the maturity date of the forward contract - when the security is delivered. In this question, the maturity date the forward contract is in 2 years from now

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