Q1.Calculate the price of a 280-day forward contract on a 7% U.S. Treasury bond (assume that the bond pays semi-annual coupon payments). The Face value of the bond is $1000. It is given that the spot price of $1,070 that has just paid a coupon and will it make coupon payments in 182 days, 360 days and 540 days. The annual risk-free rate is 5%. Assume a 365 day year.

Q.2 Assume that now 120 days have passed, the bond in the above question is trading at $1,080. Calculate the value of the forward contract on the bond to the long position, assuming the risk-free rate is 5%. Assume a 365 day year.