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It has been estimated by the Bank of Canada that global consumption (in trillions) follows the dynamics dCt = 0.1Ctdt + 0.2C+dZt, Co = 31,
It has been estimated by the Bank of Canada that global consumption (in trillions) follows the dynamics dCt = 0.1Ctdt + 0.2C+dZt, Co = 31, Assuming that Canadians can be regarded as maximizing T E 1 e 3 -0.010073dt Pat ] 0 for some T. 1. What should be the real interest rate targeted by the bank? 2. Write a Python code to find today's price of the zero-coupon bond with $1 face value that expires in one year (use 30,000 simulations). 3. Find the price of a forward contract with delivery date one year written on a bond that matures in 10 years ($1 face value). 4. Find the price of a futures contract with delivery date one year written on a bond that matures in 10 years ($1 face value). It has been estimated by the Bank of Canada that global consumption (in trillions) follows the dynamics dCt = 0.1Ctdt + 0.2C+dZt, Co = 31, Assuming that Canadians can be regarded as maximizing T E 1 e 3 -0.010073dt Pat ] 0 for some T. 1. What should be the real interest rate targeted by the bank? 2. Write a Python code to find today's price of the zero-coupon bond with $1 face value that expires in one year (use 30,000 simulations). 3. Find the price of a forward contract with delivery date one year written on a bond that matures in 10 years ($1 face value). 4. Find the price of a futures contract with delivery date one year written on a bond that matures in 10 years ($1 face value)
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