Question
Given the following table of 1-year forward rates, determine the price of a 3-year annuity-immediate paying $100/year. Year Forward Rate 1 2.5% 2 3.5% 3
Given the following table of 1-year forward rates, determine the price of a 3-year annuity-immediate paying $100/year.
| Year | Forward Rate |
| 1 | 2.5% |
| 2 | 3.5% |
| 3 | 5.0% |
| 4 | 7.0% |
Options for answers are:
$279.30
$280.20
$281.60
$277.30
$272.30
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Introduction To Derivatives And Risk Management
Authors: Robert Brooks, Don M Chance, Roberts Brooks
8th Edition
0324601212, 9780324601213
