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BSAM borrowed a 2-year loan beginning in 1 year for a principal amount of P5 million. 1-year spot rate = 7% 3-year spot rate =

BSAM borrowed a 2-year loan beginning in 1 year for a principal amount of P5 million.

1-year spot rate = 7%

3-year spot rate = 9%

Calculate the 1-year discount factor.

Calculate the 3-year discount factor.

Calculate the forward price of a 2-year loan to be issued in 1-year (₂f₁).

Calculate for 2-year spot rate.

Calculate the value today of the loan.

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