Today is t = 0. . The price of a Dollar 10-year zero coupon bond with Face Value = F is $800 10,5 = 2% (Dollar interest rate) 120,5 = 8% (Dollar forward interest rate) 20.5 = 4% (Euro forward interest rate) Contract X: for every $2 you give the bank at t = 10 they give you back 3 Euros at t = 20 (or for every $2 you borrow at t = 10 you have to pay back 3 Euros at t = 20) Contract Y: for every $2 you give the bank at t=0 they give you back 6 Euros at t = 25 . (or for every $2 you borrow at t = 0 you have to pay back 6 Euros at t = 25) Note: for a given currency, a forward interest rate in that currency allows you to lock in a lending or borrowing rate for that currency for a certain period of time. Assuming there is no arbitrage, what is the value of F? Select the answer below that is closest to the correct value. . 2 5 1.315 18 1,089 876 2,958 1,000 Today is t = 0. . The price of a Dollar 10-year zero coupon bond with Face Value = F is $800 10,5 = 2% (Dollar interest rate) 120,5 = 8% (Dollar forward interest rate) 20.5 = 4% (Euro forward interest rate) Contract X: for every $2 you give the bank at t = 10 they give you back 3 Euros at t = 20 (or for every $2 you borrow at t = 10 you have to pay back 3 Euros at t = 20) Contract Y: for every $2 you give the bank at t=0 they give you back 6 Euros at t = 25 . (or for every $2 you borrow at t = 0 you have to pay back 6 Euros at t = 25) Note: for a given currency, a forward interest rate in that currency allows you to lock in a lending or borrowing rate for that currency for a certain period of time. Assuming there is no arbitrage, what is the value of F? Select the answer below that is closest to the correct value. . 2 5 1.315 18 1,089 876 2,958 1,000