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  3. an investor enters a three-year swap contracts by

An investor enters a three-year swap contracts by paying fixed price and receive spot price...

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Finance

  1. An investor enters a three-year swap contracts by paying fixed price and receive spot price of Apples stock at the end of each year. The spot price of Apples stock is $515 now, and the risk-free rate is 3%.
  1. Draw the synthetic forwards contracts to mimicking this swap contract.
  2. Compute the rational fixed price based on arbitrage-free principal.

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