3. Today Silver is being traded at $27.29/ounce. You buy a future contract that delivers...
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3. Today Silver is being traded at $27.29/ounce. You buy a future contract that delivers Silver in 6 months from today. Contract size of each futures contract is 1000 ounces. Find out the price of each futures contract assuming 4% annual continuous compounding rate.
4. A savings account offers 4% annual interest rate compounded monthly. Find out the equivalent continuously compounding rate?
5. 4% with continuous compounding is equivalent to _______________ with quarterly compounding.
6. The zero rates for an 18 months bond is 6% and a 3-year bond is 6.5%, find out the forward rate between 18th and 36th month maturity.
7. Using the following data find out the Zero rates for both all maturities.
Par Value
Time to Maturity
Coupon Rate
Bond price
$1,000.00
6 months
0
$950.00
$1,000.00
12 months
0
$930.00
$1,000.00
18 months
6%
$950.00
$1,000.00
2 years
8%
$1,100.00
$1,000.00
2.5 years
8%
$1,050.00
$1,000.00
3 years
10%
$1,100.00
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