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) $20,5 = 8% (Dollar forward interest rate) f2 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 o (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. 1,000 1,089 876 1,315 02,958 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) $20,5 = 8% (Dollar forward interest rate) f2 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 o (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. 1,000 1,089 876 1,315 02,958